Shell places huge bet on Arctic oil riches
Published on Wed, 08 Jul 2015 81 times viewed
The Wall Street Journal reported that Royal Dutch Shell PLC is days away from drilling in the Arctic Ocean, betting it can find enough oil to justify the huge risks that keep almost every other competitor out of those icy waters.
The company is hauling two massive rigs, the Polar Pioneer and the Noble Discoverer, more than 2,000 miles up and around the Alaska coast to the Chukchi Sea, where it plans to begin work the third week of July. Accompanying the rigs are 30 support vessels and seven aircraft, a large entourage even by big oil-company standards.
The voyage represents Shell’s effort to mount a comeback in the Arctic 3 years after a different rig ran aground following an unsuccessful drilling season. This time, Shell executives say they have both costs and safety under control but the project has already hit a snag.
A federal agency said last week that Shell can’t drill wells simultaneously within a 15 mile radius to minimize impacts on walruses, which means the company may only be able to drill one well this year instead of the two it had planned. And on Tuesday, Shell said that it discovered a small breach in the hull of a vessel carrying equipment for spill response and is examining what repairs are necessary.
A Shell spokesman said that the company has modified its plans based on the new drilling requirement. It doesn’t expect the damaged vessel to affect those plans, but the answer will ultimately depend on the extent of the repairs.
Overcoming such challenges has a huge potential reward: Alaska’s portion of the Chukchi could hold the equivalent of 29 billion barrels of oil and gas, according to the US Bureau of Ocean Energy Management. That is more than twice the global reserves that Shell can currently pump at a profit.
The Arctic is a prize that Shell competitors like Exxon Mobil Corporation and Chevron Corporation aren’t pursuing for reasons ranging from collapsed oil prices to Western sanctions against Moscow. Even state-controlled giants like Russia’s OAO Rosneft have put Arctic plans on hold this year. And a consortium including Exxon and BP PLC suspended its Canadian Arctic exploration program on June 26th, saying that it wouldn’t be able to complete its work before its lease expires in 2020.
Source : The Wall Street Journal