Shell Oil has had a rough time up in Alaska. In the last year, it has had to contend with stray ships, busted engines, mismanaged contracts, and faulty spill containment equipment as it tried, and failed, to drill for oil in the Arctic Ocean.
By Juliette Kayyem: Globe Columnist: January 10, 2013
Shell Oil has had a rough time up in Alaska. In the last year, it has had to contend with stray ships, busted engines, mismanaged contracts, and faulty spill containment equipment as it tried, and failed, to drill for oil in the Arctic Ocean. On Tuesday, the Interior Department hastily announced a review of the company’s Alaskan adventure. Facing its own criticism that Interior Secretary Ken Salazar approved the risky drilling attempt, the agency will pay “special attention” to “Shell’s management and operations.” The expedited government assessment came just one day after the Kulluk, Shell’s runaway drilling vessel that separated from its tow ship in December, finally ran aground.
But if the probe doesn’t move beyond Shell Oil’s past conduct, it will have little impact. After all, given Shell’s failure to master the harsh environment, Arctic drilling is, for all practical purposes, over for now.
Mother Earth: 1. Shell Oil: 0.
But not only was 2012 a bad year for Shell, it was also a bad one for the earth. Last year was the hottest ever and the second-worst in terms of the ominously titled Climate Extremes Index. The ice caps are melting. The government’s Shell review needs to assume the obvious: In future years, unless Mother Nature’s luck changes, Shell will even the score.
Currently, it may be unsafe to drill in the Arctic, but the operative word here is “currently.” Despite all the talk of careless and greedy oil companies, Shell had been a complete outlier in seeking the authority to drill right now. The assessment of every other global oil company, as well as of environmental groups, leading scientists, and many members of Congress, is that 2013 is too soon to take advantage of the melting ice cap. In the event of a spill or accident in the remote Arctic, there is little capacity for emergency response.
The market validates these concerns. Shell has spent over $4 billion to get no further than a couple of disabled boats and a lot of pending investigations. Based on a timeline composed by Climate Progress, the insurance market Lloyd’s of London warned last April that Arctic drilling represents a “unique and hard-to-manage risk.” Major German financier WestLB soon after stopped all investments in Arctic projects, stating that “risks and costs are simply too high.” StatOil then suspended its own plans to drill, passing the risk to its competitor and admitting it will observe the “outcome of Shell’s efforts.” France’s Total SA ended the year by publicly calling Arctic drilling too risky for any company.
But to believe that the market will maintain its current risk assessment forever is to believe in the power of magical thinking. The economic and political stakes are overwhelmingly in favor of drilling. The White House is pushing for domestic sources of energy. Alaska’s elected and tribal leadership will gain much from taxes on new economic activity. And our foreign competitors near the Arctic circle — including Russia, which sent an oil tanker through the Arctic during in December — are ready to plunge into the cold.
Any review of Shell’s particular safety and security mistakes is only useful to help establish best practices for future drilling. In places like Barrow and Kodiak, Alaskans are pregnant with anticipation of a future when the risk assessment will shift. The ocean will be crowded with market activity.
All efforts to protect the fragile oceans should now be built on something that’s now lacking from our ocean planning: governance. It is time to put as much urgency into future ocean management as into reviewing Shell’s foibles. Those efforts are already ready to roll, both through the White House’s National Ocean Policy and the international management system envisioned in the Convention on the Law of the Sea. Both, for now, are being held hostage by Republicans in Congress.
But the flurry of activity around the Arctic this week is just a hint of what is likely to occur there in the years to come as we manage the consequences of our climate negligence.
Maybe this year will be cooler.
Maybe the Arctic will stop melting.
Maybe Shell Oil will give up.
Maybe wishful thinking isn’t much of a plan.