Offshore Exploration in the Arctic: Can Shell’s Oil-Spill Response Plans Keep Up?

Abstract

All around the world, oil and gas companies are being forced by resource declines to drill in less accessible areas, and the Arctic is their newest frontier. The geology above the Arctic Circle—that is, everything above latitude 66.56°N—holds an estimated 90 billion barrels of oil and 1,669 trillion cubic feet of natural gas, or 22% of the world’s undiscovered1 conventional resources, according to the U.S. Energy Information Administration.2 It’s thought that these resources lie predominantly under Arctic seas, which have recently become easier to reach due to significant reductions in seasonal ice cover associated with global climate change.3 Norway, Russia, Canada, Denmark, and other northern countries are in various stages of developing offshore Arctic programs, and diplomatic squabbles have broken out over territorial rights extending all the way to the North Pole. Between 1980 and 2000 Alaska accounted for an average one-fifth of U.S. oil production.4 But with oil flowing through the Trans-Alaska Pipeline falling by more than two-thirds since a peak in 1988,4 the recent pressure to drill in the Outer Continental Shelf (OCS) off the state’s north coast has been relentless. Alaska derives at least 90% of its revenues from oil,5 so law makers in that state—supported by much of the state’s population—have pushed hard for offshore authorization. The federal government has also indicated its support, in 2011 expressing a commitment to facilitate development in the OCS region and to expedite offshore permitting in Alaska, assuming that “safety, health, and environmental standards are fully met.”6 Now the United States has taken a big step toward opening the seas off Alaska to a new round of oil and gas exploration. In a major breakthrough for the petroleum industry and loss for drilling opponents, the U.S. Department of the Interior (DOI) in February 2012 approved Shell Gulf of Mexico, Inc.’s oil-spill response plan for the Chukchi Sea, which provides habitat for polar bears, walruses, and other wildlife, and a hunting ground for Alaska Natives who still go whaling in seal-skin boats.7 Six weeks later the company’s spill-response plan for the adjoining Beaufort Sea also was approved.8 Shell must cease drilling well before the water freezes over lest a late-season blowout cause oil to accumulate under the ice through the winter. Shell Alaska spokesman Curtis Smith says DOI approval of the plans puts the company on track to launch exploration in the region this summer (final permits to drill must still be obtained). But many critics contend it’s not possible to drill safely in the region, given the isolation and harsh weather, and they question how well the plans will protect Arctic health in the event of a spill.