As much of the world is pre-occupied with the Greek financial crisis, oil giant Shell is quietly carrying on with its plans to drill in the Arctic.
According to press reports, the oil giant is expected to begin drilling “within the next two weeks.”
This is despite the fact that company still has not received its final drilling permits and there is growing opposition to its plans worldwide.
Nevertheless a massive logistical operation continues. Late last week, some thirty ships, including its two main Arctic vessels, the Polar Pioneer and the Noble Discoverer, left an Alaskan port to start the journey to the exploratory well drilling site in the Chukchi sea.
In continuing its drilling programme, Shell is ignoring the worldwide public protests against the company’s actions. It is also giving the clearest indications yet that this is an oil company that neither cares about climate change or the future of the Arctic region, its people or its abundant, fragile wildlife.
The company is not only taking a huge risk with the future of the Arctic, but a massive financial one too. This morning, for example, oil analysts Kepler Cheuvreux predicted that the price of Brent crude will be $75 per barrel at the end of this year, which is $10 above its current level, but still way below $100 a barrel needed for Arctic oil to break even.
The price of oil may just about to go down too. Iran may be a long way from the Arctic, but if an agreement is reached with the country over its nuclear programme, then the country is looking to double its oil exports, further flooding the world with crude, with the potential to push the oil price further down.
If, and it remains a big if, Shell finds oil in commercial quantities, it could have spent up to $10 billion on its Arctic programme. That is a huge gamble by anyone’s imagination and a massive amount of money to try and recoup back. That means that Shell will be in Arctic for the long term, as more and more people will be calling for the company to leave.
Other oil companies have assessed the risks and deemed them too great. Chevron, for example, has cancelled its plans to drill in the Beaufort Sea in the Canadian Arctic.
The company will argue it is playing the long game – as it often does – and that any commercial oil may not be ready until 2030. Shell will argue that this is a time when the world will be wanting fresh supplies of oil. On the other hand, this is exactly the time that many climate scientists will be arguing that we need to be fossil-free.
But the company’s Arctic drilling could yet be derailed at the last minute. Both Shell and Obama continue to be criticised about Arctic drilling. “He (Obama) has just given Shell permission to drill in the Arctic. It’s inconceivable,” the veteran actress Jane Fonda said over the weekend. “The message is you don’t have to make a choice between the economy and the climate. The technology of sustainable and renewal energy is already there and we need to invest in that,” Fonda added.
Meanwhile, numerous environmental groups are working around the clock examining legal and political ways to stop the drilling programme, including trying to prevent the company receiving its final drilling permit.
Dan Chu, director of the Sierra Club’s Our Wild America campaign is still optimistic that enough political pressure can be put on the Obama Administration so “that they are not able to give that final permit to drill.”
Only time will tell.