After resisting the huge outcry against exploring for oil in the Arctic this summer, Shell surprised the world by pulling the plug on the project.
The company spent $7 billion preparing for and then drilling in the Chukchi Sea, but it didn’t find enough oil and gas to make further exploration worth it. Shell will drop the search for the "foreseeable" future, it says, but will take about $4 billion as a tax deduction.
Shell says the high costs of drilling in the Arctic and the uncertainty of future US regulations contributed to the decision. It is also acutely aware of the damage to its reputation as protestors hammered the company.
Incredibly, Shell wants the world to view it as a "green" company (it’s also a major player in Canada’s tar sands production). This summer, Shell announced it would drop membership in ALEC because it’s stance on climate change is "clearly inconsistent with our own" (BP also quit ALEC this year).
And it even called for an international carbon tax.
Earlier this year, CEO Ben van Beurden had the nerve to say that all carbon emissions from fossil fuels must be captured and stored in the ground to avoid potentially catastrophic levels of global warming.
van Beurden also expects the global energy system to be "zero carbon" by 2100 and that Shell will get much of its revenue from renewable energy by then.
But for now, Shell doesn’t make a penny from renewable energy and wrings out every dime from hydrocarbons. Because it insisted on pursuing Arctic drilling, the company was ousted from the Prince of Wales Corporate Leaders Group on climate change.
Shell’s decision to pull out of the Arctic is important. If it had found significant sources of oil, you can be sure the industry would be close behind wanting to open the entire Arctic to drilling.
Eni Ready to Drill
While protestors flared at Shell as it traveled to the Arctic, another oil company is already there, preparing to drill.
Eni, an Italian oil company, in cooperation with Norway’s state-owned Statoil, are in the final stage of a $5.5 billion project, The Goliat.
Wells have been drilled in the Barents Sea – about 80 kilometers north of Norway – and all that’s in the way is final approval from the government to begin production. Because the region is largely ice-free, the industry calls it "the manageable Arctic."
Norwegian protests haven’t made it into our media, and citizen lawsuits may be filed if final approval goes forward.