On May 11, the US government granted conditional consent for the drilling for oil and natural gas resources in the remote Arctic Ocean to Royal Dutch Shell PLC. (RDS.A, Financial) amidst widespread oppositions from environmentalists. This approval signifies a major boost for the oil major as well as the oil and gas industry as a whole, which was recently burdened with stringent regulations and tougher standards for hydraulic fracturing and trains hauling flammable oil. The new approval also comes with rigorous safety standards and operational regulations proposed by the Obama government in February.
Shell and its troubles in the Arctic
Shell, the fourth largest company in the world, had earlier received a green light to drill in the coveted but perilously secluded Chukchi Sea, but its initial attempt in this region was hampered by adverse environmental conditions and legal challenges and arduous safety and technical issues. The running aground of its Kulkik oil rig in December 2012 in the Gulf of Alaska was a near disaster, and prompted a backlash from environmental activists and Coast guard officials who consider this region located over a thousand miles away from the nearest Coast guard station, to be the most dangerous place for drilling with little scope for rescue and clean-up teams in case of an actual mishap. In 2013, the Interior Department censured Shell for safety inadequacies and faulty assessments, and halted all drilling operations in the region. Shell’s woes continued when last year a US federal court deemed the drilling permit as flawed.
Armed with the new federal permission, the oil company can now apply for requisite permits from state and federal agencies, but has to comply with the Endangered Species Act before venturing back to Arctic Ocean, which is the natural habitat of endangered species of whales, seals and polar bears.
Shell’s Arctic venture was plagued by protests and oppositions by environmental supporters. Tim Donaghy, senior research specialist for environmental campaigner Greenpeace, expressed grave concerns regarding the fragility and sustenance of the ecosystem and threat to its balance by Shell’s activities. His apprehensions were seconded by Mike LeVine, pacific senior counsel for the environmental group Oceana who advised the officials to critically review the proposals in view of Shell’s poor past performance in the region while Bill McKibben, co-founder of 350.org an environmental advocacy group vociferously blamed Shell for contributed to the melting of the Arctic and criticised the Obama government in supporting what he calls as ‘one of the greatest acts of corporate irresponsibility in the planet’s history’. To limit the damage being done by bad publicity and hindering protests, Shell has acquired an injunction banning harassment by human as well as unmanned drones in the rigging site from the district Court of Alaska.
The new Arctic project
Curtis Smith, a Shell spokesman stated that the milestone approval by the regulators at Bureau of Ocean Energy Management of the revised Chukchi Sea exploration plan shows their confidence in its feasibility and announced an additional investment of $1 billion this year in the $6 billion dollar project that may take off in July this year post obtaining all requisite permits and resolving the protests against housing their drill ships in Seattle port.
