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  Geotimes - November 2007 - No Arctic drilling for Shell?

Energy and Resources
No Arctic drilling for Shell?

A summer filled with legal setbacks is preventing Shell Oil Company from conducting exploratory drilling in the Beaufort Sea offshore of northern Alaska. This indefinite postponement has caused the oil company to begin laying off some of the 700 workers it hired to carry out its exploration.

Starting in mid-July, Shell had intended to drill as many as four exploratory wells in the outer continental shelf of the Beaufort Sea, before the return of the winter ice in the fall. Citing a host of environmental concerns, native residents of the region and environmental groups sued to prevent the drilling. On July 19, a federal court of appeals stopped Shell’s operations until it could review those concerns. On Aug. 15, the court upheld its earlier ruling, and now Shell must wait until December before the three-judge panel will consider the case.

Shell’s summer Arctic drilling was to be a homecoming for the company. During the 1980s, Shell discovered oil in the Beaufort Sea, but the difficulties of recovering oil offshore and the lack of a pipeline network meant producing the oil was not worth the investment at the time, oil industry consultant Ken Boyd told the Anchorage Daily News on Aug. 19.

Since then, the offshore regions of the Beaufort Sea have remained nearly untapped, says Ken Bird, a research geologist with the U.S. Geological Survey Energy Program in Menlo Park, Calif. Shell is not alone in owning federal offshore leases in the sea — BP and ConocoPhillips also own leases there — but the BP-owned Northstar is the only offshore oil field currently producing oil in these federal waters, according to the Anchorage Daily News.

Increasing oil prices and technological advances lured Shell back to the more than 14 billion barrels of oil thought to be resting below the Beaufort Sea’s frigid waters. In 2005, Shell bought leases in the Beaufort Sea from the Department of Interior’s Minerals Management Service, the agency that oversees the United States’ resources on the outer continental shelf. In February 2007, the agency approved Shell’s proposed drilling in an area estimated by the Minerals Management Service to contain 100 million to 200 million barrels of oil, according to the Anchorage Daily News.

But native residents and environmental groups, including the Sierra Club and the Natural Resources Defense Council, claim the Minerals Management Service did not adequately assess the environmental impact of Shell’s drilling. In addition to concerns about how Shell would manage an oil spill, opponents worry the drilling will harm local wildlife. In particular, opponents say noise from the drilling could force beluga and endangered bowhead whales off their migratory paths, causing local residents who engage in subsistence whaling to risk venturing further into the dangerous open waters of the Arctic Ocean.

Shell has not ceased all of its operations in the Arctic: It is still conducting seismic work unaffected by the court order. But even if Shell wins its court case in December, it will have to wait until next year to begin its exploratory drilling after the winter sea ice melts. The company announced in September that it would begin to gradually release many of the workers it had hired for the exploration project.

Shell’s legal problems are hardly unusual for oil companies in the area, which are “consistently opposed” by environmental groups when trying to begin operations in the Arctic, Bird says. In similar cases, however, the oil companies have usually prevailed. But, he suggests, if Shell isn’t allowed to drill in this instance, it could set a precedent. “If [the environmental groups] are successful in preventing Shell from drilling in the area,” Bird says, “then they could be successful anywhere else in offshore Alaska.”

Erin Wayman

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