Shell May Not Drill For Arctic Oil In 2014: Report


After cancelling its Arctic oil expeditions for this year, Royal Dutch Shell, the world’s largest oil company, has yet to apply to U.S. authorities to drill in the Arctic in 2014, according to a report by the Los Angeles Times on Wednesday.

Shell has spent nearly $5 billion preparing to drill in Alaska’s Beaufort and Chukchi seas, but was fined $1.1 million by U.S. authorities earlier this month, after recording 23 violations related to polluting the air and a drilling rig that ran aground.

The U.S. Interior Department is also set to unveil tighter regulations for offshore Arctic drilling by the end of the year, leading many major companies to reconsider drilling in the Arctic region for the moment at least. ConocoPhillips, for instance, has announced that it will not drill in the Chukchi Sea in 2014 because of "the uncertainties of evolving federal regulatory requirements."

Although the Beaufort and Chukchi seas have the potential to produce nearly 500,000 barrels of oil each day, they are also home to an abundance of wildlife, as well to some of the most extreme weather conditions in the world. Each year oil companies have a tight window to drill for oil in the region, as the waters are covered in ice for eight to nine months each year and cloaked in darkness for a third of that time.

The risk of an oil spill rapidly escalating into disaster has also necessitated for tighter safeguards and regulations for companies drilling in the region.

This week, the Pew Charitable Trusts released a lengthy analysis, recommending a smaller window to drill, so that any potential cleanup can be conducted in sufficient time before the ice comes in, while urging all rigs in the region to be of “Arctic class.”

"Right now, there are no regulations specific to the Arctic," said Marilyn Heiman, director of the U.S. Arctic Program at Pew to the LA Times, noting that many federal drilling standards remain the same whether a company is operating in the Gulf of Mexico or the Beaufort Sea.

"When the gulf spill happened [in 2010], they stopped cleaning up oil at 6-foot seas and when it was dark.... In the Arctic, there are 20-foot seas, and, come November, it's dark all day,” Heiman further noted.

Related: Black Ice: The Dangerous Race For Oil At The Top Of The World

Related: Shell To Pay $1.1 Million Fine For Polluting Arctic Air

Related: Shell Forced To Abandon Arctic Drilling Until 2013

In an email interview with the LA Times, Curtis Smith, a spokesman for Shell, declined to comment on the Pew recommendations and would not say whether the company would meet with any new regulations.

"Our future plans for offshore Alaska will depend on a number of factors, including the readiness of our rigs and our confidence that lessons learned from the 2012 operating season have been fully incorporated,” he said.

The U.S. government has demanded that Shell complete a third-party audit of its management systems before being allowed to drill in the Arctic again.

An Interior Department spokesman said Tuesday that the Shell had yet to complete the audit and have not submitted an application to drill in 2014.