Oil Companies Cool to Drilling Off Alaska’s Arctic Shores
From The Montly Fool
By Matthew DiLallo
So far, Shell has spent $5 billion on its Arctic offshore drilling program. That investment has yet to turn up any oil, or deliver any returns to its investors. It’s also not likely to deliver anything in the near future as the oil exploration company currently has its exploration program on pause after enduring a number of equipment problems. In fact, neither Shell nor its industry peers currently have much interest in pursuing oil off Alaska’s arctic shores.
The fact of the matter is that the ice filled waters off of Alaska have not been kind to Shell. Just the other day it was announced that the company would pay another $1.1 million in fines for air-quality violations from the vessels it used to drill oil-exploration wells in the Arctic last year. Those costs were just the tip of the iceberg for Shell, which originally invested $2.1 billion for leases in 2008 and has now spend about $5 billion.
The air-quality fines consisted of 23 violations from the Discoverer drillship that Shell had contracted from Noble Corp. Shell was also fined for 11 violations for the Kulluk, which was owned by Shell but operated by Noble. Shell suspended its Artic operations after the Kulluk ran aground in December of 2012.
The future of Artic drilling
Because of Shell’s misadventures, the industry has been working with the U.S. Department of the Interior to put together a baseline Arctic standard. However, the industry is really in no hurry to move forward on exploration activities. It wants to insure the right standards are in place so that drilling can be done safely and responsibly.
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