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The Arctic and Shell

Updated August 5, 2010, with extensive related links.

What makes the oil companies think they can produce oil and gas safely in the very harsh world of the Arctic oceans? They cannot do in the Gulf of Mexico, or the Niger River delta, or anywhere else for that matter.

This article is authored by a former employee of Shell Oil. His identify and background is known to us.

Back in the early mid-1980’s Shell Oil began to take a serious look at the hydrocarbon production potential of the Chukchi Sea. They formed an operating division and staffed it with management, albeit with no staff, except secretarial support for the managers. (These guys were referred to ‘managers without portfolio’).

Shell’s exploration and production research division began to investigate the regions of the Chukchi Sea where potential lease sales were likely to occur. Of interest were the basic oceanographic parameters; water depths, under topography, sea floor surface geology, ice pack characteristics, etc. The basic surveys revealed some interesting results. The sea flow was basically covered fairly deeply with soft sediment (marine mud) but the topography was highly unusual. Acoustic mapping revealed an ocean bottom that was scarred by all sorts of crisscrossing trenches from a meter or so in depth, to almost 20 meters in depth.

At first these surface trenches were thought to be remnant features from the last ice age. But they appeared to relatively young. Arguments about their age and origin could not be settled with then available data. So, Shell obtained the cooperation of the US Coast Guard and ‘borrowed’ one of their icebreakers for a summer to do some detailed ocean bottom surveys and surface mapping. In addition a pattern of acoustic buoys were left upon the ocean bottom.

The next year the icebreaker with its compliment of Shell ‘boffins’ remapped the ocean bottom surface and set about looking for the acoustic buoys. They found some, many were never found. Those that were found had been displaced. And the topography of the ocean bottom had change completely. The old ocean bottom topography was gone, replaced by a new topography that had been sculpted by the dragging of the previous winter’s pressure ridges across the ocean bottom by surface winds and ocean currents. Some of the new trenches were almost 20 meters deep.

This news came as a very rude surprise to Shell’s leaders. Shell’s head office management turned to its talent pool at its research labs for an answer. Surely there must be an answer. Shell management wanted an engineering solution to the problem posed to development of oil and gas reserves by the Arctic ice.

After some degree of consideration it was recognized that the ice sheet itself posed problems, but those problems could probably be handled with creative design features to platforms or man-made islands. The pressure ridges however, were a whole different problem. Their size and extent made them a force of nature that could not be defeated. In shallow waters it might be possible to build rock and gravel production ‘islands’ that could be repaired after each winter’s battering by the ice. However, in deeper waters construction of these islands this was not a feasible solution. Man-made platforms of some sort would be required.

Short of the use of small nuclear weapons to ‘vaporize’ the problem posed by pressure ridges there was no ‘rational or practical’ engineering solution.

Fixed platforms would not work. The use of mobile floating production platforms that could be towed away each winter was also examined. This would require the development of subsea well head assemblies that rested upon the ocean bottom, and the temporary abandonment of the wells each winter. However, there was no way to protect these assemblies from the mountains of ice that scraped across the ocean bottom every winter.

Building pipelines from a production island or a platform was also a problem. Again there was no way to protect a pipeline setting on the ocean bottom from the ice. And the technology to dig a 30 meter trench in the ocean bottom to bury a pipeline did not exist.

So, raw crude or gas would have to be processed through floating production platforms like Shell used elsewhere in the world. These would be especially adapted ships that would moor near the production platform. However, oil and gas would also have to be transported by ship because pipelines to onshore facilities were also not feasible.

Well, none of this was feasible. However, Shell management was not to be deterred.

After the off-shore lease sale in the Chukchi Sea in the mid-1980’s I received a call from a buddy of mine that worked for BP. He was curious about Shell’s intent and wanted to know if Shell’s senior management was ‘on drugs or something’. Shell had left $300 million on the table at that lease sale and surprised the other majors with its aggressive bidding for that acreage. BP, Exxon and Arco all had years of experience operating in the Arctic at Prudhoe Bay. Shell had no such experience. My BP friend asked if we at (Shell) had collectively lost our ‘frigging’ minds. In BP’s ‘humble opinion’ there was no way that production was possible from those leases, no matter how much oil and gas was found.

Shell drilled those leases and found considerable amounts of oil and gas. Of course, the judgment of BP, Exxon and Arco was correct. The leases were eventually abandoned.

Shell did have some experience in operating the near off-shore environment. In the mid-1980’s, at a place called ‘Seal Island’ Shell and its partner, Amoco, built large gravel islands in shallow off-shore waters east of Prudhoe Bay to several drill exploratory wells. Oil was discovered. About 400 million bbls of recoverable oil. However, that was not enough oil to allow economic development of the discovery. Shell temporarily abandoned its exploration wells, shut them in, and ceased operations. Shell did not permanently plug those wells, and cut and pull casing, because management had ‘booked’ the recoverable oil in the discovery as reserves. Plugging and abandonment would have meant relinquishing the lease and ‘writing off ‘ 400 million bbls of oil from from Shell’s reserve listings.

Several years passed and then Shell had a ‘minor’ crisis to deal with. The ice pack had beveled off the top of their gravels islands and had sheared the production well heads (called ‘Christmas trees’) off the wells. Because the wells had been temporarily abandoned the well casing had been filled with diesel fuel above the temporary plugs in the well. When the islands were destroyed the well heads were ripped off the well and the diesel fuel in the well’s (thousands of gallons) leaked into the Arctic Ocean. Shell had to clean up the mess, but head office still didn’t want to permanently plug the wells because of the reserve write down that they would have to take.

So, Shell knows quite well what operating in the Arctic environment entails, and is fully aware of the hazards of Arctic operations.

So, what is Shell now up to? They have again spent several billion dollars on lease acquisition. What it the plan this time? Well, the environmental situation in the Arctic has change somewhat in the last 25 years. The Arctic Ice cap is no longer what it once was. Climate warming has caused it to very rapidly retreat further and further each year. In a few decades it may disappear completely during the summer months. The ice cap that does then form in the winter won’t be as formidable as it was in the 1980’s. And the pressure ridges that form may become ‘manageable’, if not all the time then most of the time. With the modern industrial world set on a course to consume as much coal, oil and gas in the next 30 years as it has since the beginning of the industrial revolution it is a good bet the Arctic ice cap will continue to diminish in size. With that diminishment in the ice cap comes a diminishment of the impediment to oil and gas production in the shallow Arctic seas of world.

Never-the-less, production in the Arctic is still an extremely difficult proposition. In my opinion the Federal judge that ruled that a proper environmental impact statement had not been filed and that more study is required was absolutely correct. It is doubtful that the environmental problems that prohibited development of oil and gas reserves in the shallow Arctic seas have changed all that much in the last 25 years. Those old studies done by Shell research that showed production was not feasible need to be pulled off the shelf and updated. And this should be done by Federal court order. And the studies should be done by entities not allied with ‘big oil’. While the Federal government reaps billions in off-shore sales to the oil companies, the ability of those oil companies to safely exploit and produce in the Arctic offshore environment has not yet been demonstrated.

What makes the oil companies think they can produce oil and gas safely in the very harsh world of the Arctic oceans? They cannot do in the Gulf of Mexico, or the Niger River delta, or anywhere else for that matter. Shell wouldn’t do it at Seal Island in the mid-1980’s, despite the known risks. BP didn’t inspect its pipeline and do required repairs for corrosion, and the end result was a major land spill. The failure to do timely inspections on the pipeline was a conscious decision on the part of BP management in order to save money.

The sad fact of the matter is, that is most cases failure to operate safely and responsibly is not due to the lack of the necessary technology, it is due to a; ‘we don’t really give a crap attitude’ on the part of oil company management. One need only look at how ‘big oil’ operates in Nigeria to understand the true attitude.

And this is ironic because taking the necessary measures to prevent major failures, like blowouts or pipeline rupture, are extremely cost effective. The math is extraordinarily simple and straight-forward.

Exxon had their ‘black swan’ event in the late 1980’s. BP’s most recent ‘black swan’ problem is another classic example. BP will never recover what they have lost in the Gulf of Mexico. The value of the lost resource, the oil flowing into the Gulf of Mexico at 80,000 bbls/day is about $5 million/day at current well head prices. So, BP has lost somewhere on the order of  $400 – $500 million in wasted resource value alone. But that is a drop in the bucket compared to cleanup costs which could exceed $20 billion.

How much would it have cost BP annually to operate at the highest of safety standards? An additional $20 – $50 million/year perhaps? $20 – $50 million vs $20 billion. It would take 400 – 1000 years of $20 – $50 million in additional expenditures for safer operations to match what they have lost in the last few months from one incident of incompetent operation. And make no mistake, that blowout in the Gulf of Mexico was the end product of indifference and incompetence on the part of BP drilling and production engineering operations leadership. That failure was in turn the consequence of irresponsible operational policies. These policies were in turn the result of poor leadership, and irresponsible and incompetent management at the highest levels of the company.

Exploitation of oil and gas in the Arctic must be a zero tolerance affair. If you want examples of the environment disasters that will be encountered by a failure to produce safely and responsibly go visit and inspect the Arctic oil fields, gas fields, and pipelines in Russia. We don’t need to speculate about those possible consequences. The Russians are living with that issue now.

By the way, the information about the oceanographic surveys done by Shell is important information. Shell has probably forgotten about them because their corporate memory has either been ‘retired’ or ‘released’. The World Wildlife Fund should raise the issue directly in court. The courts could, in fact, seek subpoenas for that data from Shell, or if it no longer exists, and that could be the case, then order new oceanographic surveys and ice studies. This is basic information that is needed before any kind of production should be allowed. One would think the oil companies themselves would want that kind of information.


Shell Chukchi Sea Application 2010 Application for Incidental Harassment Authorization for the Non-Lethal Taking of Whales and Seals in Conjunction with Planned 2010 Exploration Drilling Program Chukchi Sea, Alaska: April 2010

The Biggest Oil Spills in History

Arctic Melting and Oil: Countries Stake Claims as World Faces Environmental Disaster

Chukchi Cap

Recent blowout is one of only 18 in Alaska: 18 December 2008

Arctic Governments And Industry Still Unprepared For Oil Spills 20 Years After Exxon Valdez: 19 March 2009

Arctic Oil: A Boon For Nest Predators: 9 September 2009

Low Concentrations of Oxygen and Nutrients Slowing Biodegradation of Exxon Valdez Oil: 18 January 2010

Arctic Voyage Illuminating Ocean Optics 26 July 2010

Alaska’s Arctic Seas: Court Ruling Halts Offshore Lease Sale 27 July 2010

U.S.-Canadian mission set to map Arctic seafloor: 1 August 2010

Chukchi Sea Planning Area: Draft Environmental Impact Statement by Minerals Management Service Volume 1 (pending)

Chukchi Sea Planning Area: Draft Environmental Impact Statement by Minerals Management Service Volume 2 and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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