Shell, Gazprom & co - drill, baby, drill

[Anne]

On a day when the Russian government has awarded Gazprom 17 offshore sites in the Barents and Kara Seas it seems a good idea to start an arguably (but not really) off-topic thread on the subject of oil and gas in the Arctic.

Both Gazprom and Rosneft will provide back-door opportunities for western companies to gain access to the Arctic shelf, as Russia has much more lax environmental standards and regulations. Gazprom has already teamed up with Total, and Rosneft has been in talks with Norway’s Statoil and Shell. The Russian government has urged the two energy giants to team up in joint ventures in order to efficiently develop and explore the uncharted waters in the Siberian Sea.

BP has a 19.75% stake in Rosneft, which has been awarded 12 licences. BP is looking forward to working with them, and we all know what a grand safety record BP has.

Meanwhile Shell, which has licences to drill in the Chukchi and Beaufort Seas, announced in February that it was suspending drilling for the rest of the year to look at safety:

Shell first obtained licences from the US Department of the Interior in 2005 to explore the Arctic ocean off the northern and north-western coasts of Alaska.

It has since spent $4.5bn (£3bn), culminating in two exploratory wells completed during the short summer drilling season last year.

But Shell ran into multiple problems during the drilling programme:
* the company failed to have a spill-response barge on site before the drills reached oil-bearing zones, as it had promised, and a containment dome was damaged during testing drilling in the Chukchi Sea had to be called off less than 24 hours after it began on 9 September due to a major ice floe
* a fire broke out on the Noble Discoverer rig that Shell had hired for the Chukchi Sea drilling, and the US Coast Guard discovered 16 safety violations on board, which have now been passed to the justice department
* the Kulluk, a circular drilling barge, broke away from its towing vessel and ran aground on its way to a shipyard in Washington State in late December

The decision to abort drilling this year may in part be due to the fact that both drilling rigs are likely to be stuck in East Asia, undergoing repairs.

Shell has also faced widespread opposition to its activities from environmental activists.

Many people have commented on the irony of AGW creating the conditions (a melting Arctic) for further opportunities to exploit fossil fuel, a feedback loop if ever there was one.

[Anne]

Brendan May has an excellent article today about Shell's environmental credentials culminating in this plea:

I'd like to see a progressive businessman like Sir Richard Branson develop a narrative that runs broadly as follows. "I run an airline. I do what I can to explore alternative fuels and designs to minimise our impact. I take advice from the right people. But I accept we are dependent on fossil fuels and a major contributor to climate change. I'm also an explorer and a citizen and I've seen some of the Earth's most beautiful and pristine places. The Arctic is one such place. I cannot and will not add to the planet's fragility by running my business on the fruits of Arctic oil drilling. It's a step too far, and I believe there are some parts of the natural world we must now leave ALONE. That's why Virgin Atlantic will operate on 'Arctic-free fuel' for as long as I'm in charge."
Think of the market signal that would send. Of course, it needs cross-sector collaborative and pre-competitive approaches - no one company can do this (or anything comparably meaningful) alone. And it isn't just fuel, it's about the use of Arctic resources for a range of materials, such as plastics, clothing and so on. If a group of progressive CEOs, from airlines, consumer goods firms, clothing companies and packaging giants, were to send out this "Arctic-free" message, then the seemingly impossible would become a market imperative for energy companies. It's been done in other sectors, many times over.
There is no perfect fossil fuel, and there will always be social and environmental issues around any oil extraction. But we can draw a line in the Arctic ice. We must do so without delay. The question for Shell is whether it could potentially be a beneficiary of such a trend, or the lonely laggard that failed to wake up to what its customer base was saying.
Shell portrays itself as a buzzing hub of innovation, exploring the frontiers of new energy sources in a fast changing world. In its stubborn refusal to abandon its Arctic misadventure, it confirms it is still, at its core, a fossil fuel hungry dinosaur. The question is whether Shell will finally see sense, and get out before it's too late.

[ivica]

Anne, thanks.

Wikipedia article Predictability miss this paragraph: 

Predictability in Human–Environment interaction
In the study of human–environment interaction, predictability is the property to forecast the consequences of a human action given the current state of the human-system.

My gut feeling says to me that sparrows from my backyard know the forecast.

[anonymous]

I expect the Russian Prirazlomnaya rig going productive in the Arctic this summer. May be it happend already, last thing I read was final test were started. I wish my Russian would work without the help of Google Translate. I was next to two students speaking Russian in the metro the week before and it sounded so special and interestingly different to my ears. However from time to time I manage to copy paste Cyrillic words into Google and look what happens.



Platform London has an eye on this monstrous pioneer of Arctic drilling. If you read the story how the rig was constructed and how the regulators closed all eyes, you can't imagine it will be the first offshore in the Arctic operating year round in a place with only few ice free months. 



A constant shuttle service will deliver the crude to a floating storage and offloading vessel near Murmansk, so this presents another possible point of failure. Any spill will first pollute the surrounding coast, then get picked up by the Transpolar Drift and eventually pollutes Greenland's coasts.



Despite Russia has a considerable icebreaker fleet, I'm not eager to learn about their oil spill containment capabilities. The field has reserves of 610 million barrels, that's less than 2 month of the world's crude oil consumption.

[Anne]

Greenpeace challenges Rosneft over seismic sounding in the Barents Sea, saying it's damaging to wildlife.