Arctic Oil-Drilling Delays Allow Time for a Safety Review
Shell Alaska’s six-year, $4.5 billion-and-counting attempt to tap into the oil under the Arctic Ocean has seemed snakebit recently (or, given the indigenous wildlife, whalebit?).
In July, one of its drilling rigs nearly ran ashore, and then this month it was almost hit by an ice floe many times the size of Manhattan. Meanwhile, an oil containment barge destined for duty at the drilling site has been plagued by mechanical problems and remains stranded in Bellingham, Washington. Drilling plans have now been put off until next summer.
To environmental groups, the delay is evidence that the company shouldn’t be allowed to drill in the pristine northern waters. Many of them would just as soon the Arctic seafloor be left untapped.
That would be unrealistic. The world needs the oil. Royal Dutch Shell Plc (RDSA) just has to show it can extract it safely.
About 24 billion barrels of oil are thought to be below the American continental shelf in the Chukchi and Beaufort seas, according to U.S. Geological Survey estimates -- which amounts to about a third of all the oil in the Arctic Circle. Although that would not be enough to wean the U.S. from imported crude, with the high price of oil today (more than $90 a barrel) it is well worth extracting.
Still, the delay could be constructive if Shell and the U.S. government use the time to address discomfiting safety issues.
The troubles that Shell has had with its containment barge are not exactly encouraging. This month, after various mechanical problems with the vessel had been fixed, a test of its oil containment dome failed. According to a report in the Los Angeles Times, a minisubmarine (also meant to be used in the event of a spill) was sent to investigate, but became entangled in the dome’s anchor lines and sank into the silt at the bottom of Puget Sound.
Now, in the short time it has left before the ocean ices over for the winter, Shell will drill 1,300-foot “top holes” for exploratory wells it hopes to drill next summer. If viable discoveries are made, actual production is still many years off, as it will require constructing new conduits to carry oil from offshore rigs to the Trans Alaska Pipeline System.
Shell is preparing multiple defenses against a blowout, including two sets of plungers on its blowout preventers and additional “capping stacks” that could seal a malfunctioning blowout preventer. In addition, the company has promised to test those preventers more frequently than is required.
The company’s efforts are commendable, but they don’t take away the need for strong regulatory oversight. Congress has done nothing to raise ocean oil-drilling standards since the Deepwater Horizon disaster in the Gulf of Mexico more than two years ago.
The Interior Department has filled some of the gap by strengthening its oversight of ocean drilling. Although this is laudable, it still needs to make sure that Shell and other companies wanting to operate in the Arctic are equipped to handle the unique conditions there. The agency, which is planning to hold two more lease sales in the region during the next five years, already excludes certain sensitive areas in the Arctic Ocean from exploration. It also restricts the time that drilling can occur to the warmest months.
Other concerns need to be addressed. Although the water is relatively shallow -- about 150 feet deep, compared with 5,000 feet in the Gulf of Mexico -- floating ice is a constant threat. So it is essential that all vessels used in drilling and all equipment used in cleanup be field-tested to work in cold, icy and windy conditions.
The same rising temperatures that make it easier than ever to bring oil-drilling rigs to the Arctic are causing drastic environmental change -- melting ice, warmer water, stronger waves and greater erosion. This puts stress on the fish, birds, plants and animals in the ecosystem. Important as it is to find new sources of oil, it is equally important to take every safety precaution so that this fragile, (still) frosty patch of the planet remains protected.
Today’s highlights: the editors on Libor and criminal charges; Susan P. Crawford on Apple’s war with Google; Jeffrey Goldberg on “Muslim rage” in Pakistan; William Pesek on Myanmar’s economic development; Ramesh Ponnuru on QE3 FAQs; Roben Farzad on the breakup between Goldman Sachs and ambitious youth; Jeff Rubin on oil’s inadequate replacements.
To contact the Bloomberg View editorial board: email@example.com.