On January 30, Shell's new CEO, Ben van Beurden, announced that the company will not pursue exploration drilling in the Arctic Ocean in 2014. He also revealed Shell's poor fourth-quarter earnings, attributable in part to offshore exploration expenditures, like those previously made in the Arctic. This announcement is great news for the Arctic ecosystem -- home to vast expanses of important habitat for marine life, including many species of fish.
Van Beurden's announcement came just days after the Ninth Circuit Court of Appeals found that the Department of the Interior (DOI) violated U.S. law in deciding to hold drilling Lease Sale 193, during which Shell and other oil companies purchased leases in the Chukchi Sea. The court ruled that the government failed to accurately evaluate the negative impacts that selling leases could have on the Arctic Ocean.
Though the government -- and many other experts -- believe that production of oil from the Chukchi Sea is expensive and impractical, the government still has to accurately assess the potential impacts of oil development, were production to occur. In this case, DOI dramatically understated those potential impacts. The environmental impact statement was based on estimates that the proposed offshore oil rigs would produce 1 billion barrels of oil, but ignored earlier government estimates that the rigs could actually extract 12 billion barrels -- 12 times more than the amount used to assess the potential damage to the environment by this project. As one commentator noted, this underestimation is akin to establishing safety standards for a car going 5 mph, when in actuality the car will be driven at 60 mph.
The ruling was in response to a lawsuit filed by Oceana and a coalition of conservation and Alaska Native partners, represented by Earthjustice. This decision marks the second time that a court has ruled that DOI failed to comply with the National Environmental Policy Act in evaluating potential impacts of the nearly 30-million-acre lease sale in the Chukchi Sea.
2014 will be the second consecutive year that planned drilling was scrapped in the Arctic. Plans for a 2013 drilling season were scrapped in the wake of failed exploration attempts in 2012. The Arctic Ocean is infamously unforgiving, and its icy and unpredictable nature makes it impossible to clean up an oil spill in the region. Shell's 2012 oil containment dome -- the device that will supposedly contain potential spills during the exploration -- failed during a testing exercise in the calm waters of Puget Sound. These past accidents have clearly demonstrated the challenges of operating safely in Alaska's hostile seas. The oil industry has not adequately explained why so many things went wrong in that first failed attempt, and they have yet to prove that such failures will not occur again.
What's more, oil pumped from the Arctic will exacerbate climate change and will not lower gas prices here in the U.S. Oil instantly becomes a global commodity and Americans who buy it will pay the global market price. Furthermore, the amount of oil predicted to lie in Alaska's Arctic Ocean would only supply the U.S. demand for roughly two years. At a time when the world is looking to transition to clean energy, it makes sense to leave this nonrenewable resource in the ground.
We applaud the court's ruling and Shell's newfound, if forced, caution. Alaska has already seen more than its fair share of oil disasters, and drilling in the Arctic will inevitably bring another spill. We ask you, do we really need another Exxon Valdez? Or worse, another Deepwater Horizon? We don't. We need the Arctic to remain clean and spill-free.
The U.S. government should stop and fully evaluate the potential risks and benefits of Arctic drilling. We believe that when they do so, it will be clear that energy companies are not prepared to carry out oil and gas activities safely in the Arctic Ocean.