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Is BP Behind Us or is it an Election Year?

Ken Silverstein May 09, 2012

Is BP behind us or is it an election year? Alaskans, at least, are saying that if Royal Dutch Shell is allowed to explore for oil and gas off its coastline then it would be a bountiful supply line as well as a huge job creator.

The debate over whether to allow more oil and gas drilling near the Arctic slope has long been a battle point between Alaskans and environmentalists. Throughout the years, momentum shifts from one interest group to the next, depending on the circumstances. Before the BP oil spill in April 2010, the Democratic-led White House was easing the resistance to more off-shore drilling. After the accident, however, the national demeanor changed and the administration hit the brakes.

Now, of course, it’s a presidential election year. Whether the decision to allow Shell to drill in the Arctic’s Chukchi and Beaufort Seas is tied to that or whether it is an extension of an arduous review process is in the mind of the beholder.

Shell would like to begin exploration by July 1, although it still has some hoops to jump through. Altogether, the oil company has spent $3 billion over five years priming the wells for production. The U.S. Geological Survey says that the area could hold 10.36 billion barrels of oil and 8.6 trillion cubic feet of natural gas, possibly more.

“We have conducted an exhaustive review of Shell’s response plan for the Beaufort Sea,” says Bureau of Safety and Environmental Enforcement Director James Watson. “Our focus moving forward will be to hold Shell accountable and to follow-up with exercises, reviews and inspections to ensure that all personnel and equipment are positioned and ready.”

The bureau goes on to say that Shell is proposing to drill up to four shallow water wells, which is much less treacherous territory than the deep waters of the Gulf of Mexico where the BP oil spill occurred. As part of its spill response plan, the company must be prepared for any accident that is three-times worse than anything previously submitted. It must also detail the equipment it would use to clean up and explain fully how such tools would logistically get to those isolated locations.

Shell’s Strategy

Vigilance is the key. Part of Shell’s strategy to avoid a fate similar to that of BP is to keep rescue staffs on call as well as to inspect its sites once a week. Shell also said that the icy waters in the Arctic make any oil clean-ups easier than they would be in the warmer waters of the Gulf.

That’s has not satisfied skeptics. Some U.S. congressional representatives from states along the Pacific coastline say that rigorous prevention technologies must first be established. They also say that responding to any disaster in the Arctic would be exceedingly difficult given the distance between the drilling sites and onshore positions.

“Shell may have met all federal spill response requirements, but this does not mean that meaningful quantities of oil would be recovered after a major spill in the Arctic Ocean,” says Lois Epstein, director of Arctic programs for The Wilderness Society of Alaska. “Only about 3 percent of the oil was recovered after the BP spill, which occurred under temperate conditions.”

In the two years since the BP oil spill, the Obama administration has beefed up existing regulations, increased the fines and added new rules. Such laws are meant to ensure that companies “blow-out preventers” and the cemented seals covering them truly do work before any developers start exploring.

As the world saw during the April 2010 disaster, natural gas is oftentimes discovered alongside oil. But proponents of natural gas emphasize that unlike oil, it is not a solid and therefore it is less problematic. Altogether, the Interior Department says that 27 percent of oil and 15 percent of natural gas is now discovered offshore.

After the BP oil spill, the White House did the right thing by banning future exploration until it could get a handle on what had just happened. Now, it is trying to resurrect a policy that was in the works prior to the accident. Its apparent decision to allow Shell to drill off the Alaskan coastline is a manifestation of that strategy that may also have political benefits for the president.

EnergyBiz Insider is the Winner of the 2011 Online Column category awarded by Media Industry News, MIN. Ken Silverstein has also been named one of the Top Economics Journalists by Wall Street Economists.

Twitter: @Ken_Silverstein

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