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Stuart Hampton

Shell Heads Back to the Arctic to Hunt for Oil and Gas

by Stuart Hampton | Dun & Bradstreet Editor

May 20, 2015 | No Comments »

Arctic-oil_shutterstock_234374374_990pxWhile the idea of exploring for oil in the Arctic worries environmentalists, Royal Dutch Shell is undeterred. It is heading back to the Arctic this summer to hunt for oil and gas.

Shell has spent almost $6 billion and has waited for several years to get regulatory clearance to drill in the Beaufort and Chukchi seas.

It began top-hole drilling on two probes in 2012 but ran into a number of equipment problems and inspection failures, dramatically highlighted by the Kulluk rig running aground off an Alaska island at the end of the year after slipping its tow lines in a storm.

The Noble Discoverer dragged its anchor in July 2013 and nearly ran aground on the Alaska coast. Four months later it was damaged by an explosion and fire while in port in the Aleutian Islands.

Shell abandoned its work in the Arctic and withdrew.

But that was then. Last week Shell’s new and bigger rig, the 400-foot-long, 355-foot-tall Polar Pioneer slipped into the Port of Seattle last week (much to the chagrin of hundreds of protestors) on its way to the Arctic.

In a few weeks the slightly smaller Noble Discoverer rig (the same one that suffered a series of mishaps in 2013) will join it.

It is not just a matter recouping its investment that is driving Shell onward; it is the promise of abundant hydrocarbon riches in the frozen North.

The US Geological Survey estimates that the Arctic holds around 30% of the world’s undiscovered natural gas, as well as 13% of its yet-to-be-found oil and 22% of its undiscovered natural gas liquids.

The 400 billion barrels of oil equivalent of potential reserves is about 10 times the hydrocarbons produced thus far from the North Sea.

Shell is also armed with a recently granted conditional approval from the Obama administration’s Bureau of Ocean Energy Management for a revised Chukchi Sea exploration plan.

Before operations can begin this summer, Shell needs to get the remainder of its permits approved and prepare its contractors, assets, and contingency plans for the high-wire act that is operating in the environmentally sensitive Arctic region.

And as Shell already discovered during its 2012 and 2013 efforts, nothing comes easy in the harsh and isolated conditions above the Arctic Circle.

The White Whale of Arctic hydrocarbon riches has to date eluded even the most driven of oil exploration and production companies.

British editorial veteran Stuart Hampton has been covering oil and gas companies for Hoover’s since the Neogene-Quaternary period. Well, actually, since the early 1990s. For the best overview of the oil industry and its history he recommends Daniel Yergin’s “The Prize.” You can also follow Stuart on Twitter.


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