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Why Shell had the worst week ever

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By Tony Dokoupil19 July 2015

This should have been one of Shell’s best weeks ever. Instead, it shaped up like the corporate equivalent of “The Hangover Part III.” And a happy ending is nowhere in sight. 

This was supposed to be seven-day stretch of toothy smiles, hearty back-slaps and healthy runs on the company’s stock because Shell’s window for drilling in the Arctic Ocean officially opened on July 15. Under the terms of the plan, approved in May by the Obama administration, the company has until September 28 to work on the largest untapped oil reserve on Earth. 

That’s not a lot of time to sink a drill bit through the icy water, confirm the presence of oil, and prepare a wellhead for production. But after investing ten years and six billion dollars just to get to this moment, Shell felt poised for success. The company’s two rigs—the Polar Pioneer and the Noble Discoverer—made it to Dutch Harbor, Alaska, along with dozens of support vessels and seven aircraft. 

But that’s as far as they made it. 

RELATED: Activists say ‘Shell No!’ to arctic drilling

Instead of getting down to work, the project was thrown into a holding pattern. A gash opened on the hull of one of the company’s ice breakers, forcing the ship all the way back to Oregon for repairs, which could take weeks out of an already short season. Shell is also still awaiting one more drilling-specific permit from the Bureau of Safety and Environmental Enforcement, the wing of the Interior Department responsible for offshore development.

Late last month, after a coalition of ten activist groups called attention to it, federal regulators forced Shell to potentially halve its ambitions in the area The company wanted to drill two simultaneous wells within 15 miles of each other in the Chukchi Sea. But that’s a violation of established noise protections for polar bears, walruses and other wildlife, the government ruled. 

This week, the same coalition of activist groups, seized on the fact of Shell’s stricken ice breaker to argue that the feds should deny Shell’s permit. “She continues to experience problems that evidence a lack of attention to detail,” read a letter the group sent to the Interior Department, calling on the department to deny Shell’s ambitions in the Arctic. The issues raised “are not hypothetical matters,” declared Fuel Fix, the influential energy blog of The Houston Chronicle

In a further distraction, Shell had to scribble out a hopeful rumor that the company was considering dropping the word “oil” from its name. British Petroleum made a similar move not long ago, rechristening itself as BP, a company with a vision “beyond petroleum.” But alas, Shell Oil remains a major oil company, a spokesperson had to explain. These days, that’s not such a popular declaration to make. 

Shell’s plan to drill in the Arctic also picked up political heat this week, after several months of relative calm. “I think Arctic drilling is insane,” former vice-president and current climate champion Al Gore told a reporter in Toronto. “I think the countries around the world would be very well advised to put restrictions on drilling for oil in the Arctic ocean,” Gore added. 

As if in response a group of American senators unveiled a bill on Thursday that seeks to ban drilling in the Arctic. The “Stop Arctic Ocean Drilling Act of 2015” would prohibit any new or renewed leases in the region. Shell’s leases start expiring in 2017, which is long before they would be able to actually get Arctic oil on-line and into the market. “Drilling in the Arctic is the height of irresponsibility,” said Oregon senator Jeff Merkley. “We need to put it off limits permanently.” He was joined by six other senators, including president candidate Bernie Sanders. 

The bill has almost no chance of passing, but it does have a band of hard-to-miss activists behind it. Thousands of protesters turned out this past May and June, waving “Shell No” flags at the entrance to the company’s terminal in Seattle. Other protesters slipped into kayaks and swarmed the company’s massive rigs. 

On Saturday some of those same protestors are planning a new demonstration in Layfayette park, across from the White House. The plan is to stage “an Arctic marine scene,” complete with kayaks, inflatable boats and “man representations of water,” according to a statement from organizers. 

For Shell, one imagines, Monday can’t come soon enough.


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