Shell’s Arctic albatross

by James Turner

January 30, 2014

The Shell conical drilling unit Kulluk sits aground on the southeast shore of Sitkalidak Island about 40 miles southwest of Kodiak City, Alaska, in 40 mph winds and 20-foot seas January 1, 2013. The Kulluk grounded following many efforts by tug and Coast Guard crews to tow the vessel to a safe harbor when it was beset by winter storm weather during a tow from Dutch Harbor, Alaska, to Everett, Wash.

© The United States Coast Guard

God save thee, ancient Mariner!

From the fiends, that plague thee thus!

Why look’st thou so?’ ‘With my cross-bow

I shot the Albatross.’

Samuel Taylor Coleridge

The Rime of the Ancient Mariner, 1798

A little over ten years ago, Shell decided to invest in a major new project drilling in the melting Arctic ocean off the Alaskan coast. At the time, oil prices were rocketing upwards and the world’s demand for oil seemed to be rising inexorably. Shell believed it could bring modern technology to bear on one of the most hostile environments on the planet, and walk away with some of the estimated 90bn barrels of oil that experts believe exist in the Arctic.

Fast forward to 2014, and the picture looks rather different.Todayin the Hague, Shell’s new CEO told an audience of investors that his company would not be drilling in the Arctic for the second year running, despite having spent $5bn and countless working hours on the project. The decision was forced by a court ruling in San Francisco last week, which deemed the US government has underestimated the amount of oil in the region, and by doing so invalidated the drilling permits they’d handed out. It was a major victory for our allies who brought the case – groups like theInupiat community of the Arctic slope,The Sierra Club,The Alaska Wilderness leagueand many others (you can read the full list and the court rulinghere).

Today’s news caps a miserable decade in the Arctic for Shell. This included a accident prone drilling effort in 2012 that would have been laughable if it hadn’t been so dangerous. In the space of a few weeks we saw twogrounded oil rigs, engine fires, crumpled spill response equipment and air pollution fines. These failures led the US interior secretary to complain that Shell ‘screwed up‘ hardly the kind of language we’re used to from serving politicians. In 2013 the company saw no alternative but to suspend its plans in the Arctic. In 2014, following the court ruling, Shell will yet again be spending money for nothing.

The Arctic has become an albatross around Shell’s neck. It’s turning into a curse, something that feels as if it was doomed from the start. The region carries high costs, high risks and a huge level of uncertainty. Years of failure have made a major dent in the company’s reputation, and the billions that are seeping away are making investors and shareholders nervous. And bigger than all of this, much bigger, is the folly of drilling for oil in one of the most fragile and beautiful places on our earth. This is the biggest mistake the company has made. By seeing the Arctic as just another part of the portfolio, Shell’s executives have underestimated the power of our movement to shift public opinion against them. It’s clear to any objective person that drilling in the Arctic will never be safe, and that an oil spill would be a disaster for the people and animals that live there. It’s also glaringly obvious that using melting sea ice as an excuse to drill for more oil is a bad idea. It’s an affront to common sense. And yet this oil company is so desperate to maintain its profit margins that it is prepared to gamble its entire reputation on the Arctic.

Shells new CEO has a choice. He can continue to place billion dollar bets on a project that is coming to define his company in the 21st century, or he can back out before an oil spill or major accident does irrevocable damage to Shell’s image and the Arctic itself. Millions of people are urging him to do the right thing, and todays decision suggests he might just be listening. Lets keep the momentum up.Write to Shell’s CEO. Speak out, speak up.We can win this.

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