Shell Oil Cancels 2013 Arctic Drilling

From Popular Mechanics

By Carl Davis

It’s no surprise, but now it’s official: Shell oil announced that it will not be drilling for oil north of the Alaska coast in 2013. The company bored preliminary holes in the fall of 2012 in preparation for drilling a series of exploratory wells this summer. The idea was to become the first company to find significant oil in America’s slice of the Arctic Ocean, and open up a whole new energy frontier. That plan will have to wait.

The company’s Kulluk oil rig, which ran aground in the Gulf of Alaska on New Year’s Eve, still needs to be transported to Dutch Harbor in the Aleutian Islands before it can begin its journey to an Asian shipyard for repairs. The Noble Discoverer drillship, Shell’s second rig, is even more troubled. A few days ago, the Coast Guard referred its investigation into violations onboard the ship to the Department of Justice for potential prosecution.

It’s been a rough week for the oil industry, overall. The energy news is all about the BP oil spill trial, opposition to the Keystone XL pipeline, and investigations into Shell’s drilling program. The stories share some DNA. In recent years, we’ve seen increasing focus on hard-to-get oil, crude that you can’t extract from shallow water or from easy-to-access wells in the desert. That’s why we have deep-water drilling, rising output from the oil sands of Alberta, and exploration in the Arctic Ocean: The age of easy oil is waning. These alternative sources of oil are resulting in growing production and even faster-rising estimates of domestic fossil fuel reserves. They are a big part of the future. But the technical difficulties and environmental impacts are becoming increasingly clear.

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