A free-market energy blog
Random header image... Refresh for more!

‘Let’s Go’ … Game On for Shell in the Arctic (a milestone in the still maturing hydrocarbon energy era)

“I can’t downplay this. It’s obviously very exciting for us…. This is opening up a new chapter in Alaska’s oil and gas history that is literally starting today.”

- Pete Slaiby, Shell Alaska. Quoted in Jennifer A. Dlouhy,Shell Begins Drilling Well off Alaska,”  San Francisco Chronicle, September 9, 2012.

Profit-seeking, consumer-directed business is proper, necessary, and heroic. Free-market-based energy enterprises (oil, gas, and coal) are quite unlike government-dependent (crony) businesses (ethanol, windpower, and on-grid solar). Ken Lay’s Enron is (was) a leading example of the latter; Koch Industries’ Charles Koch, writing in the Wall Street Journal yesterday, epitomizes the former.

Shell has scaled back its (scarcely profitable) renewable energy investments and is back to its oil and gas roots. Its advertising is no longer about pie-in-the-sky energies and more about here, now energy. LET’S GO! The company found out the hard way that self-styled environmentalists are really anti-industrial and obstructionist when it comes to producing the energy needed by world consumers.

The expense and delay of Shell’s ambitious plans to drill offshore Alaska have been huge. But that chapter is largely over. It is GAME ON for Arctic drilling. LET’S GO!

[Weak] Opposition

The argument against drilling is hypothetical and borders on postmodernism. Stated Greenpeace:

Whatever Shell is able to do in the narrow window between now and when the sea ice returns, it won’t erase the clear evidence we’ve seen in the past two months that there’s no such thing as safe drilling in the Arctic. The company’s Arctic drilling program this summer has not only been an epic PR failure, but a dangerous logistical failure as well. They’ve only proven one thing this summer: that oil companies are simply not equipped to deal with the unique challenges of operating in the Arctic.

Thank goodness that Greenpeace wasn’t around Titusville, Pennsylvania, in 1859 when the commercial oil-well drilling began. If they had stopped the industry in its tracks, and blocked oil imports, then horses and manure would be our daily lot for the most part. Such is the precautionary principle run wild.

Over at the Huffington Post, Robert Cavnar writes:

There are many questions to be asked about why our demand for hydrocarbon-based fuels is so great that we are now drilling for hydrocarbons in some of the most harsh conditions in the world. Oil companies are spending billions of dollars to access huge hydrocarbon resources in these conditions for two reasons: first, they can, and second, they make money doing it.

It’s not a question of can we do this; the real question is why. This is a policy issue. The problem, though, is that with no comprehensive energy policy that establishes national priorities for sustainable energy production and consumption, we are in this endless cycle of find it, burn it, find it, burn it. It’s just that finding it is getting harder, more expensive, and carries huge risk for environmental catastrophe.

Central energy planning from smartest guys in the room anyone?

Recording History-in-the-Making

A You-Tube video records the small step for offshore man, giant leap for mankind.

“Shell readies the drill bit for first spud!” This weekend crews aboard the Noble Discoverer began drilling at Shell’s “Burger” prospect in the Chukchi Sea, Alaska. This marks the culmination of more than six-years of effort by Shell to begin exploring Alaska’s Outer Continental Shelf. This is the first time a drill bit has touched the sea floor in the U.S. Chukchi Sea in more than two decades.

Shell’s Press Release was justifiably proud:

Shell is pleased to announce today, September 9 2012, that crews aboard the Noble Discoverer began drilling at Shell’s “Burger” prospect in the Chukchi Sea. 

The occasion is historic. It’s the first time a drill bit has touched the sea floor in the U.S. Chukchi Sea in more than two decades. Today marks the culmination of Shell’s six-year effort to explore for potentially significant oil and gas reserves, which are believed to lie under Alaska’s Outer Continental Shelf.

In the days to come, drilling will continue in the Chukchi Sea, and we will prepare for drilling to commence in the Beaufort Sea.

This is an exciting time for Alaska and for Shell. We look forward to continued drilling progress throughout the next several weeks and to adding another chapter to Alaska’s esteemed oil and gas history. We’re proud to be offshore Alaska, and we’re extremely proud of the preparation we’ve put in place to do it right.

Congratulations Shell. And apologies from some of us in the public policy community for not doing a better job in presenting the case for environmentally sound, entrepreneurial friendly energy policy that would have cut down on the regulatory delay that fronted your historic effort.

Consumers ’round the world should applaud your diligence to make a new chapter in offshore drilling a reality.

4 comments

1 Francesca { 09.11.12 at 9:15 pm }

Thank you, Shell! I love you! You make MY life better! And thank you, too, Robert Bradly Jr and Master Resource, for giving my life and human life in general the moral support it deserves.

2 rbradley { 09.15.12 at 8:09 am }

Saw this re Shell Canada:

“Shell Requests Canadian Carbon Tax” (Cooler Heads Digest: 9/14/12)

Royal Dutch Shell PLC’s Canadian President, Lorraine Mitchelmore, made news this week by publicly calling for restrictions on carbon emissions in Canada via a tax, cap-and-trade scheme, or regulation. It is slightly curious to read about an oil executive calling for policies that would reduce oil consumption. It makes more sense when you read that Shell recently announced the construction of a $1.35 billion carbon capture and sequestration project in conjunction with Chevron, Marathon Oil, and Canadian taxpayers, as roughly 65% of the initial cost will be covered by public funding. As is widely understood, carbon capture and storage is not a profitable venture without a significant cap or price on carbon emissions. Mitchelmore’s announcement is more accurately understood in the context of increasing the likelihood that their speculative investment will become profitable by handicapping the competition, rather than a true concern over carbon dioxide emissions.”

Rent-seeking and political capitalism are hard to dislodge!

3 T. Caine { 09.16.12 at 9:30 pm }

Well, not quite “game on”…

Shell Halts Arctic Drilling Right After It Began

“A day after it began drilling its first well in the Arctic Ocean, Shell has been forced to temporarily abandon the work because of sea ice moving into the area.”

http://green.blogs.nytimes.com/2012/09/10/shell-halts-arctic-drilling-right-after-it-began/

Let’s hope the first of what are undoubtedly numerous setbacks doesn’t lead to anything more than frustration spilling out over the arctic.

4 rbradley { 09.16.12 at 9:36 pm }

Here is the latest. No completions this year, but prep work for the next window.

According to E&E News: “The company said it will drill as many top holes — shallow wells that stop far short of oil-bearing rock — as possible through the end of October to get a head start on its 2013 season.”

Leave a Comment