After years of legal and logistical setbacks and dogged opposition from environmentalists, Royal Dutch Shell submitted a plan to the federal government on Thursday to try once again to explore for oil in the Alaskan Arctic.
The company emphasized that it had not made a final decision on whether to drill or not next summer, but that the filing with the Interior Department preserved its options. Shell says the program consists of two drilling rigs working simultaneously in the Chukchi Sea, which has the potential to produce more than 400,000 barrels of oil a day.
Over the last eight years Shell’s Alaskan Arctic efforts have been plagued by blunders and accidents involving ships and support equipment, climaxing with the grounding of one of its drilling vessels in late December 2012 in stormy seas. Environmental groups seized on the episodes as evidence to support their claims that drilling in the Arctic is overly risky because of ice floes, darkness in winter and the presence of several species of already threatened wildlife, including polar bears.
The company, which has already spent roughly $6 billion on the effort, drilled two shallow wells in Alaska’s Arctic during 2012. But the federal government did not allow Shell to reach the deeper, oil-bearing formations; the company did not have the required ability to contain spills after the testing failure of a containment dome designed to cap a runaway well and collect oil in case of an accident.
After Shell’s problems, ConocoPhillips and the Norwegian oil giant Statoil suspended their Alaskan Arctic drilling plans.
Shell’s future plans for the Alaskan Arctic have looked doubtful since Ben van Beurden took over as the company’s new chief executive nearly nine months ago and pledged to increase discipline on rising costs and improve cash flow.
The company announced in January that it would not make an effort to drill this summer, after a federal appeals court ruled that the Interior Department had engaged in a flawed environmental review in 2008 when it sold Shell over $2 billion in oil leases in the Chukchi Sea. The government is redoing the environmental assessment, and Shell will need to fulfill several regulatory requirements before it can drill again.
The Alaskan Arctic is one of the great untapped frontiers for offshore drilling in the United States, with the potential to produce up to a million barrels a day, industry experts say. But Alaska has suffered a long decline in its oil production because of the aging of its onshore fields and underinvestment.
Gov. Sean Parnell pushed a tax overhaul supported by the oil industry through the Alaska Legislature last year, and this month beat back a ballot referendum effort intended to return the state to its old tax regime. With new tax breaks and incentives, the industry has pledged to invest more in Alaska’s oil fields.
In recent weeks, Shell has shown renewed interest in its Alaska efforts by signing an agreement with several Alaska Native corporations to share profits from offshore drilling.
A Shell spokesman, Curtis Smith, said that the new plan had fortified safety features, including new tugboats, an extra helicopter, additional offshore supply vessels and better management of contractors.
“All to say we’ve taken a critical look at the experiences we’ve had in Alaska over the last several years and this exploration plan takes those learnings into account,” he added.
But Travis Nichols, a spokesman for Greenpeace, was highly critical of Shell’s planning. “Anyone who has been following this story knows Shell is not Arctic-ready,” he said, “and more importantly, the Arctic will never be Shell-ready.”
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