Seven years and $4.5 billion after it bought leases to explore for oil off Alaska’s Arctic coast, Royal Dutch Shell is finally close to drilling a well in the pristine Chukchi Sea, confident that it will discover a vast oil reservoir buried thousands of feet below the seafloor.
“This is kind of like Christmas Eve,” said Lt. Gov. Mead Treadwell (R). “We can’t wait to see if Santa comes.”
But Santa’s path has not been smooth.
The thickest ice in a decade, along with problems in obtaining a permit for a 4,700-ton oil-spill-containment system, pushed Shell’s July 15 start date back three weeks. These glitches have postponed the first offshore drilling in the American Arctic in 15 years, a massive undertaking that could eventually yield 400,000 barrels of oil per day.
The Coast Guard delayed the firm’s oil recovery barge Arctic Challenger from leaving the Pacific Northwest earlier this month after raising questions about its ability to withstand a severe storm. Then, Shell petitioned the Environment Protection Agency to modify an air emission permit on the grounds that the technology did not exist to meet one of the requirements. Finally this past Saturday, Shell’s drill ship Noble Discoverer dragged its anchor off Alaska’s Aleutian Islands and drifted to within 100 yards of shore.
“The last thing Shell wants is a picture of a rogue platform running around,” said Fadel Gheit, an oil analyst with Oppenheimer & Co. “It is going to be the laughing stock of the late shows. ‘We spent billions of dollars and can’t even hook up the thing properly.’ ”
Shell is one of the few global oil giants that does not operate onshore in Alaska. And because oil firms are planning more Arctic drilling in the future as warming temperatures and melting ice make the area more accessible, the entire industry has a stake in the success of Shell’s drilling program.