Shell's Alaska Drilling Window is Shrinking

Shell is still waiting for the last permit that would let it begin exploratory drilling off the coast of Alaska, but this year’s window for that activity is getting smaller.

Under the terms of its existing permits, Shell’s drilling in the Chukchi Sea must end by September 24, while activity in the Beaufort Sea must cease on October 31.

Shell still needs the last of more than 30 permits and even after it that one comes this week, it will be another two weeks before a special barge it needs can be moved to the area, reports Bloomberg.

"It seems to me that we are getting closer and closer to the point where they might not be able to do anything this year," Philip Weiss, an analyst with Argus Research, told Bloomberg. "They’re running out of time."

Shell, which has spent more than $4.5 billion to get to this point, maintains that it will drill this year when it receives its final permit – even if the time it has for doing so is short.

Shell spokeswoman Kelly op de Weegh told Bloomberg in an email:

"Our goal remains to drill and complete as many wells as time allows this open-water drilling season. We are in communication with a number of agencies and are considering our options. We will make the most of the time we have this season." 

An Arctic oil well takes about two months to drill, and Shell already scaled back its plans this year from five wells to two wells. Another five are planned for next season.

For the complete Bloomberg article.

The final decision from the Department of the Interior (DOI) was due by mid-August, although comments in July by DOI Secretary Ken Salazar suggested there is still a possibility them might not be granted.

"We don’t know if it will occur, and if it does occur, it will be done under the most watched program in the history of the United States," he said.

Nagging Concerns Over Oil Spill Response

The remaining issue remains concerns over Shell’s oil spill clean-up plans. 

US Coast Guard officials have repeatedly said that the resources for cleaning up an oil spill in the Arctic Ocean don’t exist, and they have specific concerns with the clean-up barger Artic Challenge (which is still in Bellingham, Washington).

A coalition of environmental groups represented by Earthjustice filed a lawsuit last month challenging the government’s approval of Shell’s oil spill response plan. 

"There is a very real possibility that winter sea ice could close in and shut down spill response, leaving a blowout uncontrolled for eight or more months," says Earthjustice.

The video below, created by the Center for American Progress, details the risks of Arctic drilling:


While Arctic oil spills pose a unique problem, because of the potential for freezing, several other recent developments have raised the level of public awareness about oil spill cleanup.

In its investigation of Enbridge’s Kalamazoo River spill in Michigan – the largest onshore incident in US history — the National Transportation Safety Board (NTSB) faults three shifts of Enbridge employees who failed to notice the leak, the result of long-term pipe corrosion that created a hole almost 80 inches long.

"Their employees performed like Keystone Kops and failed to recognize their pipeline had ruptured and continued to pump crude into the environment," says Deborah Hersman, chairman of the NTSB.

After the first alarms sounded, the pipeline was restarted twice, the NTSB’s investigation shows. In fact, 81 percent of the oil spilled after the initial alerts, the NTSB reports. 

The Pipeline and Hazardous Safety Administration (PHSA) levied a $3.7 million fine against Enbridge, even though the agency itself is partly to blame for the incident. The NTSB cited weak regulations covering pipeline and repair, and the PHSA’s inadequate review of the Enbridge oil spill response plan as contributors to the Michigan mess.

"This accident is a wake-up call to the industry, the regulator and the public," Hersman says. "Likewise, for the regulator to delegate too much authority to the regulated to assess their own system risks and failures and correct them is tantamount to the fox guarding the hen house."

You can read a synopsis of the NTSB investigation report here.

Are Oil and Gas Companies Misleading Investors?

A new report by Ceres suggests that big oil and gas companies are less than forthcoming about the risks of deepwater oil spills (regardless of the location), which violates Securities and Exchange Commission (SEC) mandates for business risk disclosure.

The report, "Sustainable Extraction? An Analysis of SEC Disclosure by Major Oil & Gas Companies on Climate Risk and Deepwater Drilling Risk," analyzes the information shared by 10 of the largest public oil and gas companies in the world. The companies include Apache, BP, Chevron, ConocoPhillips, Eni, ExxonMobil, Marathon, Shell, Suncor and Total.

Among these companies, Ceres finds that BP, Eni and Sunoco provide more risk disclosure than the others, with Apache and ExxonMobil at the bottom of the list. Six of the companies provided no information at all about the physical risks of their activities, and eight of them inadequately disclosed their greenhouse gas emissions in SEC filings, finds Ceres.

"Investors deserve better disclosure than this, and the SEC requires it," says Mindy Lubber, president of Ceres. "As the BP Gulf spill, the Total gas leak in the North Sea, and several other recent mishaps show, the risks of extracting oil and gas from remote places by ever-more complex methods are profoundly real, even before considering how climate change and carbon emission mitigation can impact these projects."

Maybe this analysis should be required summer reading for every member of Congress before they return from their recess in early September and vote on their plan to approve more drilling up and down the Atlantic and Pacific coasts.

The House voted in late July to upend the Obama Administration’s five-year drilling plan and replace it will one of their own. The bill, called H.R. 6082, would expand the  number of offshore oil and gas leases to 28 for 2012 through 2017, up from the 15 proposed by the White House.

For the complete Ceres report:

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