The Rising Influence of Rising Affluence

[DewDiligence]

Shell’s woes in the Arctic could lead to another drilling moratorium, consultants say:

http://www.nytimes.com/2013/01/18/business/energy-environment/rivals-watch-travails-of-shell-arctic-drilling.html

Royal Dutch Shell’s Arctic drilling program is now officially in jeopardy and its prospects will depend on the findings of two continuing federal inquiries. One review is on the grounding of the Kulluk drill ship on New Year’s Eve after it was set adrift for five days in stormy weather, and the other is on the safety management of the entire Shell program.

… energy specialists and outside advisers to Mr. Salazar said the administration review, to be completed by March, could result in an outright drilling moratorium similar to the one imposed after the 2010 BP spill in the Gulf of Mexico. Surging domestic oil and gas production, they say, affords the administration time to go slowly in the Arctic given Shell’s rocky, accident-prone start.

… Senator Mark Begich, Democrat of Alaska, a strong advocate of Arctic oil and gas exploration, said that even a one-year delay would be a “disaster” that would set the drilling program back years. “Because of the logistical requirements, this could easily be a three-year delay. In the Gulf of Mexico, a year means a year. In the Arctic, a year would mean three.” [Maybe someone can explain Begrich’s arithmetic.]

…Halting Arctic drilling, even if temporarily, would please environmentalists, perhaps affording the Obama administration political space to approve the contentious Keystone XL pipeline connecting oil sand fields in Canada to refineries in the United States. The administration could decide on both projects in late March, presenting it with complex political calculations…

…Energy specialists are concerned that the Kulluk’s engines, while adrift, might have been flooded with seawater, leaving them so badly damaged that the vessel might not be ready in 2013, even if Shell were allowed to proceed.

What Shell’s Arctic about competitors? According to the article, Statoil’s plans are on indefinite hold, while Total has renounced Arctic drilling entirely; however, COP says it remains committed to 2014 drilling start in its own Arctic program.

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