The Frozen Frontier: Is Shell Ready For The Risks Of Arctic Drilling?

Guest blog authored by Jim Coburn, who directs Ceres’s corporate sustainability disclosure program:

Just two years after BP’s Deepwater Horizon rig exploded in the Gulf of Mexico, another oil industry giant is poised to begin drilling in an even more forbidding, unpredictable and remote environment: the Alaskan shoreline.Shell is moving forward with at least two Arctic wells this year, at a time when confidence in the oil and gas industry’s risk management practices is remarkably low.

In the wake of the Deepwater Horizon disaster, several reports have found that many oil and gas companies—not just BP—were poorly managing the risks of offshore drilling. As it prepares to move into the Arctic, has Shell set itself apart from its competitors, or is the company taking avoidable risks in an unforgiving environment?

A new report by Ceres shows that oil and gas companies—Shell included—are not doing enough to manage offshore drilling risks and disclose their efforts to investors. The report, Sustainable Extraction?, examines risk disclosure in SEC filings submitted in the first quarter of 2011 by 10 of the world’s largest oil and gas companies. It finds that out of 50 deepwater risk disclosure scores on key metrics including spill response procedures and drilling risk management, only four scores were good, and 29 (nearly 60 percent) were poor or no disclosure.

This striking lack of disclosure makes it nearly impossible for investors to understand how companies are managing the range of potential drilling risks.  And investors are already wary.

Lloyd’s, the world’s largest insurance market, cautions that “the Arctic is a frontier unlike any other” that will “remain a complex risk environment.” In its Arctic Opening report, Lloyd’s highlights geographic remoteness, ongoing changes to the environment as a result of climate change and extreme weather as key risk factors of offshore drilling in the Arctic.
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New and Frozen Frontier Awaits Offshore Oil Drilling

By JOHN M. BRODER and CLIFFORD KRAUSS

Jim Wilson/New York Times 

Edward Itta, the former mayor of North Slope Borough and an Inupiat Eskimo, campaigned against offshore drilling.

 

WASHINGTON — Shortly before Thanksgiving in 2010, the leaders of the commission President Obama had appointed to investigate the Deepwater Horizon oil spill in the Gulf of Mexico sat down in the Oval Office to brief him.

After listening to their findings about the BP accident and the safety of deepwater drilling, the president abruptly changed the subject.

“Where are you coming out on the offshore Arctic?” he asked.

William K. Reilly, a former chief of the Environmental Protection Agency and a commission co-chairman, was startled, as was Carol M. Browner, the president’s top adviser at the time on energy and climate change. Although a proposal by Shell to drill in the Arctic had been a source of dissension, it was not a major focus of the panel’s work.

“It’s not deep water, right?” the president said, noting that Shell’s proposal involved low-pressure wells in 150 feet of water, nothing like BP’s 5,000-foot high-pressure well that blew out in the gulf.

“What that told me,” Mr. Reilly later recounted, “was that the president had already gotten deeply into this issue and was prepared to go forward.”

The president’s preoccupation with the Arctic proposal, even as the nation was still reeling from the BP spill, was the first hint that Shell’s audacious plan to drill in waters previously considered untouchable had gone from improbable to inevitable.

Barring a successful last-minute legal challenge by environmental groups, Shell will begin drilling test wells off the coast of northern Alaska in July, opening a new frontier in domestic oil exploration and accelerating a global rush to tap the untold resources beneath the frozen ocean.

It is a moment of major promise and considerable danger.

Industry experts and national security officials view the Alaskan Arctic as the last great domestic oil prospect, one that over time could bring the country a giant step closer to cutting its dependence on foreign oil.

But many Alaska Natives and environmental advocates say drilling threatens wildlife and pristine shorelines, and perpetuates the nation’s reliance on dirty fossil fuels.

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Loch Ness Monster-Like Animal Filmed in Alaska?

The alleged sea serpent has a long neck, a horse-like head, large eyes and back bumps that stick out of the water.

By Jennifer Viegas

A still from a video that claims to show footage of Alaska's version of a Loch Ness monster.

A video from 2009 shows something mysterious moving across the surface of the sea that resembles an Alaskan version of the Loch Ness monster.

Some are claiming that the animal is a "Cadborosaurus," a type of reptile or lizard that got its name from Cadboro Bay, in British Columbia. They say that what's in the video is a sea serpent that dwells in the North Pacific and possibly other regions.

Accounts generally describe it as having a long neck, a horse-like head, large eyes, and back bumps that stick out of the water.

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Oil Fight: Conservationists vs. Shell in Alaska

Green groups worry how oil drilling may affect whales and seals; feds say any risk is negligible.

By Eric Niiler

The endangered bearded seal is one mammal that lives in the area that conservationists are concerned might be affected by Shell's plans.

Federal officials say oil drilling in the Arctic Ocean will have "a negligible impact" on the region's endangered whales and seals, but conservationists say the report fails to account for the long-term effects of oil development on marine wildlife and ignores lessons from the Gulf of Mexico oil spill.

The National Marine Fisheries Service released a 54-page report assessing the risks to marine mammals from drilling planned for several sites in the Chukchi and Beaufort Seas north of Alaska. Shell wants to drill beginning in July 2012.

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Why? Tell Me Why!: Alaska Greenhouse Gas Emissions

For its small population, Alaska is one of the biggest emitters of greenhouse gases. This week Kasey-Dee Gardner finds out why.

Why? Tell Me Why!: Alaska Oil

After spending a week in Alaska, Discovery News' Kasey-Dee Gardner wanted to find out why the state is so abundant in that resource.

Denali National Park Alaska

Wild and primitive Denali National Park encompasses about 9500 square miles (approximately 6 million acres). And year after year, many visitors travel to Denali Park, making it one of the top Alaska travel destinations. Roughly 400,000 travelers journey to the park every year, between late May and early September.

Denali National Park is located about 240 miles north of Anchorage and 120 mile south of Fairbanks on the George Parks Highway. No Alaska vacation would be complete without a trip to Denali Park.

http://www.nps.gov/dena/index.htm