According to a recent Financial Times article, Royal Dutch Shell is offering to create an oil containment system for the Arctic if the government allows them to drill offshore in Alaska. The company is extremely eager to start drilling in this region because it is considered a mecca of untapped oil reserves (FT). Shell signed a ten year lease to drill here almost five years ago and have yet to begin drilling. This is due to government barriers and environmental concerns that have blocked the drilling here. They've invested several billion dollars in this project, which is why they are so eager to get things moving. The company has laid out a plan that consists of containing the oil, should there be a spill. The details of this plan include a collector anchored to the ocean floor and a standby rig which would provide relief in case of a disaster (FT). They have presented these ideas to the government for approval and are eagerly awaiting a response. Many feel they won't have an issue, but one never knows. Shell is asking for a decision by December 1st. The man that is vice-president of Shell Alaska even released a statement saying that the situation would not be good if they decided to sue for losses on leases they paid for due to the government barriers (FT).
If Shell truly has the technology and expertise to start safely drilling offshore in Alaska, this could be huge progress for the industry. As the reserves here stand in the billions of gallons, there is much money to be made. Another great thing about this is, it is domestic oil reserves. However, in the wake of the Deepwater Horizon, all safety issues need to be dealt with, as drilling in the Arctic presents many challenges that were not even factors in the Gulf of Mexico. Shell did pay for these leases and deserves the right to drill, but their vice-president's remarks came off with a threatening tone to me and I don't know how much the government and the public will appreciate that. The industry will benefit as a whole from this because it presents potential to gain a lot of profit domestically, which will benefit the nation as a whole as well. That being said, the plan that they have come up with is a safety plan simply attached to their old drilling plan. The government needs to ensure that it all flows cohesively in order to guarantee that it is a solid plan that will work properly. At the bottom of the Arctic lies great potential for the oil industry. If Shell can safely and effectively tap these reserves, there will be numerous benefits for the energy industry.
http://www.ft.com/cms/s/0/3c15baec-d4a6-11df-b230-00144feabdc0.html
There is not much I can disagree with here. I am all for reducing our dependence on the Middle East and other regions for oil. I would agree with you in that whoever drills in the Arctic should be careful. I admire the fact that they have produced a comprehensive safety plan in case of a spill. However, you have to wonder why they had not created such a thing before. Why did companies like Shell not have to propose such a plan to drill in the Gulf of Mexico? Perhaps that could have averted the recent BP disaster.
ReplyDeleteYou raise a valid point there. To me, that is a sign that regulations aren't up to par with what they should be.
ReplyDelete