Unfreezing Arctic oil

26 September 2012 By Christopher Swann

Warnings from Total’s CEO about the safety of drilling in the region might sound like sour grapes. But environmental issues forced Shell to delay plans and deterred peers. Technological progress and $110 crude, though, won’t keep Big Oil from tapping the Arctic’s riches for long.

This content is for Subscribers only

Context News

Christophe de Margerie, chief executive of French oil company Total, has said offshore drilling in the Arctic may be too environmentally risky.

“Oil on Greenland would be a disaster,” he said in an interview with the Financial Times on Sept. 25. “A leak would do too much damage to the image of the company.”

On Sept. 17 Royal Dutch Shell announced that it was delaying its plans to drill in the Arctic until next July, after a piece of safety equipment was damaged during tests. The company has been acquiring leases in the Arctic Chukchi and Beaufort seas in 2005 and has spent $4.5 billion to prepare for drilling.

The head of exploration at Statoil, the Norwegian oil company, has said that Shell’s problems had reduced the allure of drilling offshore in the area. The company said it had postponed drilling in the Chukchi Sea by a year until 2015.

The U.S. Geological Survey estimated in 2008 that the Arctic could contain as much as 22 percent of the world’s undiscovered hydrocarbons. About 80 percent of this is in the form of natural gas and 20 percent in crude. That would amount to 90 billion barrels of crude oil, equivalent to about 3 years of current global consumption.

Context News

Christophe de Margerie, chief executive of French oil company Total, has said offshore drilling in the Arctic may be too environmentally risky.

“Oil on Greenland would be a disaster,” he said in an interview with the Financial Times on Sept. 25. “A leak would do too much damage to the image of the company.”

Email a friend

Please complete the form below.

Required fields *