Arctic Update: Oil Companies Call Off Northern Drilling

 

Both Shell and Total SA have announced a pause in drilling for crude oil in the Arctic. 

Christophe de Margerie, chief executive officer of Total SA, recently commented that the threat of a spill was too risky for the image of their company. 

"Oil on Greenland would be a disaster. A leak would do too much damage to the image of the company," he told the Financial Times.

After a significant amount of setbacks -- along with widespread protesting -- Shell also announced it will not drill for oil in the Arctic north this year. 

Shell has successfully obtained two permits for its $4.5-billion exploratory drilling projects in the Beaufort and Chukchi Seas, however significant damage to its safety equipment and containment system has put the project on hold until after the winter ice melts away next spring. 

Environmental groups say the move proves that drilling in the north is too dangerous to go forward. 

"Shell’s announcement is recognition of what we've been saying all along: The company cannot safely drill in our Arctic waters," said Michael Brune, executive director of the Sierra Club, told Business Week.

A recent lawsuit launched by the oil giant may hint at the effectiveness of recent anti-drilling activism. This week, Shell is taking Greenpeace International to court in Amsterdam in hopes of banning its members from holding protests closer than 500 feet at any Shell property. 

And Shell, unlike Total SA, still views its decision as only a postponement.

“Shell believes that the Arctic has significant untapped potential and will play an increasingly important role in meeting the energy challenge,” Bill Tanner, Shell spokesman, told Marketwatch.