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Shell’s Arctic Dilemma

CONTRIBUTOR COMMENT

In the context of BvB’s comments about the Arctic, it is perhaps worth noting that in the absence of an intention to pursue their Arctic prospects, Shell would be obliged to write off/write down their past expenditure… And that would have resulted in a very miserable result for 2014. The problem has at least been delayed, but it won’t go away.

RELATED: Bad idea: Shell’s gearing up to start drilling in the Arctic again: salon.com

Extract

Neither risk of an oil spill nor global climate change nor the falling price of oil will keep Shell from exploiting the Arctic’s oil.

After suspending its Arctic program for years following the grounding of one of its drilling rigs, the company announced Thursday that it plans to start drilling this summer in Alaska’s Chukchi Sea.

“Will we go ahead?” CEO Ben van Beurden said during the company’s fourth quarter results conference. “Yes if we can. I’d be so disappointed if we wouldn’t.”

It’s a perplexing decision. For one thing, Arctic drilling is an inherently risky activity, and Shell has a poor track record of getting it right. And even when it is done right, says Mackenzie Funk, who reported an in-depth e-book on the company’s 2012 Arctic fiasco, it’s incredibly expensive. “Simply the practicality of getting giant rigs up there, the practicality of getting oil from that far away from the rest of us to market is a huge, huge undertaking,” Funk recently told Salon.

“We will only do this if we feel that we can do it responsibly,” van Beurden told the BBC

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