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Statoil, Shell and the Arctic Ocean

From a former Shell employee…

This follows up on my article… What happens if Statoil is involved in major Arctic Ocean blowout?

I am absolutely certain that senior level Statoil management is fully aware of the potential ‘political consequences’ if any of their exploration or production operations in US Arctic waters were to suffer from a major ‘environmental incident’. The BP fiasco has sensitized the entire industry to that issue. I am also certain that the Norwegian government is likewise aware of the potential consequences.

(I am also certain that the Dept. of Interior and MMS are in over their little heads and clueless about how to deal with such a situation.)

So, it it my guess that discussions between Norwegian governmental representatives and Statoil representatives about Statoil operational policies in US waters have already taken place. And it is my guess the decision has already been made at Statoil to follow the far more rigid ‘Norwegian standards’ for operational and environmental safety when operating in US waters. This decision is not only a ‘good’ business decision, but politically wise as well. Statoil clearly cannot afford to be involved in any sort of ‘incident’ of note.

By following such a policy Statoil will actually set the industry ‘standard’ for operational safety in US Arctic waters. Given that this is most probably the case, it seems reasonable to me that this ‘Norwegian standard’ should become the ‘de facto’ norm for operating in US Arctic waters (why not in all US waters?).

If Statoil cannot afford to be involved in an ‘Arctic incident’ for obvious economic and political reasons, then it seems to me the same holds true for Shell USA (Royal Dutch Shell). Not after BP’s fiasco in the Gulf of Mexico.

(Any bets on whether BP will be allowed to drill in the US far offshore Arctic in our lifetimes? After their bungling in the Gulf of Mexico they are going to have a hard enough time getting permits to drill and develop the Liberty field in the near offshore.)

Of course, Shell USA will not operate to those same ‘Norwegian safety standards’ as Statoil will because they have no requirement to do so. Those standards are more rigid than US standards and more expensive to follow. And besides Shell USA is (was) a US oil company. Right? But expense is clearly not the issue here. If Statoil can afford to operate this way why can’t Shell USA (Royal Dutch Shell)? What is the issue here? Can someone at Shell or the Dept. of the Interior explain this to me? My poor feeble mind just doesn’t get it.

Shell’ Arctic Drill Ship

Noble Drilling has apparently acquired Frontier Drilling for about the price as Shell paid for their Chukchi leases. The acquisition was apparently effective at the end of June. Frontier (now Noble) and Shell are joint venture partners in the construction of two new drill ships specifically designed to operate in Arctic waters, and both are under contract to Shell for at least five years. These ships are the Bully I and Bully II, and both are supposedly state of the art ships. The Bully I is supposed to go into service this year followed by Bully II next year. Maybe Shell can think about using one of these modern rigs to drill their Chukchi Arctic exploration wells now that they have a years delay in the program. Frontier also owns the refurbished Japanese log carrier they were going to use to drill those wells. Just a thought.

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