Monday, September 28, 2015

Shell abandons Arctic oil exploration for foreseeable future

Activists reacted positively to Shell's announcement of an end to Arctic oil exploration in the Chukchi sea.

In a media release today Royal Dutch Shell announced it was discontinuing it's Arctic oil drilling program in the Chukchi Sea, off Alaska, blaming the treacherous conditions and the regulatory environment.

Exploratory drilling to 6800 feet was undertaken with some indications of oil and gas in the Burger J well, but not in sufficient quantities to warrant further exploration in this part of the basin.

Marvin Odum, Director, Shell Upstream Americas said "Shell continues to see important exploration potential in the basin, and the area is likely to ultimately be of strategic importance to Alaska and the US. However, this is a clearly disappointing exploration outcome for this part of the basin.”

The press release went on to say that Shell will now cease further exploration activity in offshore Alaska for the foreseeable future. "This decision reflects both the Burger J well result, the high costs associated with the project, and the challenging and unpredictable federal regulatory environment in offshore Alaska." said the media release.

The exploration project carries a balance sheet value of approximately $3.0 billion, with approximately a further $1.1 billion of future contractual commitments. These will be reflected in the companies third quarter 2015 results.

Shell holds exploratory permits for 275 Outer Continental Shelf blocks in the Chukchi Sea.

Greenpeace International Executive Director Kumi Naidoo Responded in a statement:

“This is a defining day for the Arctic. It’s a huge victory for the millions of people who stood up against Shell and a disaster for other oil companies with interests in the region. Shell has gambled big and lost big, both in terms of financial cost and its public reputation. This has become the most controversial oil project in the world, and despite its bluster Shell has been forced to walk away with nothing.

“It’s time to make the Arctic ocean off limits to all oil companies. This may be the best chance we get to create permanent protection for the Arctic and make the switch to renewable energy instead. If we are serious about dealing with climate change we will need to completely change our current way of thinking. Drilling in the melting Arctic is not compatible with this shift.

“Greenpeace’s campaign to save the Arctic will continue with passion and increased strength. We are campaigning for a protected sanctuary in international waters around the North Pole, and we hope that vision is one step closer after today.”

Shell vessels met with sustained protests from climate activists in May in Seattle with the Polar Pioneer blockaded and made unwelcome in the Port of Seattle. In July one of Shell's icebreaker vessels returned to port in Portland and was met by vociferous bridge and water protests when the vessel attempted to leave.

This follows the grounding of a Shell oil rig platform in December 2012 while it was under tow from Alaska to Washington State.

Sierra Club Executive Director Michael Brune released the following statement:

“Shell’s abandonment of drilling and cancellation of all exploratory activity in the Arctic is joyous news for our climate, communities along the Arctic Ocean, and the hundreds of thousands of people who have joined in public protests saying ‘Shell No’ to Arctic drilling.

“We hope this announcement leads President Obama to cancel the proposed 2016-2017 lease sales, remove the prospect of Arctic drilling from the 2017-2022 Outer Continental Shelf five year leasing plan, and permanently protect the Arctic from the dangers of oil and gas drilling.

“Thankfully, our climate is now spared from the significant disruption drilling in the Arctic would cause, and the communities along the Arctic Ocean can breathe a sigh of relief that they no longer have to fear a “major oil spill” from Shell.

“While we are thrilled by Shell’s announcement, this recipe for disaster should have never been cooked up in the first place. Rather than allow $7 billion to be spent on reckless plans to dig up the Arctic, we must leave oil and gas where they belong -- in the ground, while investing in clean and renewable forms of energy.”

Arctic and deep sea oil needs to remain unburned

Climate scientists have reported in a peer reviewed study in January 2015 that 88 percent of Global Fossil Fuel reserves need to remain unburned if we are to limit global warming temperature rise to 2 °C throughout the twenty-first century. This applies especially to those reserves more marginal and costly to recover such as in the Arctic or under the deep sea.

Lead author Dr Christophe McGlade, Research Associate at the UCL Institute for Sustainable Resources said: “We’ve now got tangible figures of the quantities and locations of fossil fuels that should remain unused in trying to keep within the 2°C temperature limit. Policy makers must realise that their instincts to completely use the fossil fuels within their countries are wholly incompatible with their commitments to the 2°C goal. If they go ahead with developing their own resources, they must be asked which reserves elsewhere should remain unburnt in order for the carbon budget not to be exceeded.”

The authors say clearly in the study abstract, "We show that development of resources in the Arctic and any increase in unconventional oil production are incommensurate with efforts to limit average global warming to 2 °C. "

I discuss this study in particular with regards to development of Galilee basin coal in Queensland, Australia.

Meanwhile, British Petroleum (BP) is continuing it's deep sea oil exploration project in the Great Australian Bight. It is not the only deep sea oil project proceeding:

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