Shorter Royal Dutch Shell: It’s society’s fault we’re drilling in the Arctic and we’re doing you all a service

From Inside Shell’s Extreme Plan to Drill for Oil in the Arctic. A global oil glut has tanked prices and cut profits—so why won’t Shell give up on the north?

I hate how this WordPress style makes quoted text italicized, so I’m going to try something different to indicate quoted text – the following indented paragraphs are all from the above article:

In a windowless conference room in Anchorage, a dozen Royal Dutch Shell employees report on the highest-profile oil project in the multinational’s vast global portfolio. Warmed by mid-July temperatures, Arctic ice in the Chukchi Sea, northwest of the Alaskan mainland, is receding. Storms are easing; helicopter flights will soon resume. Underwater volcanoes—yes, volcanoes—are dormant. “That’s good news for us,” Ann Pickard, Shell’s top executive for the Arctic, whispers to a visitor.

. . .

on July 30, Shell’s chief executive officer, Ben Van Beurden, announced that as a result of $50-a-barrel oil, a 55 percent decline since last year, the company’s profit fell by a third in the second quarter. Expecting prices to “remain low for some time,” Van Beurden announced plans to eliminate 6,500 jobs, part of a broader contraction in a reeling industry. Even against this challenging economic backdrop, Shell won’t postpone or downsize its Arctic dreams. The offshore Alaska field, Van Beurden said, “has the potential to be multiple times larger than the largest prospects in the U.S. Gulf of Mexico, so it’s huge.”

This raises the question of why Shell is doubling down on the Arctic amid a worldwide supply glut, and at the same time that many politicians are vowing to address global warming. Among the major oil companies, it stands out for its frank discussion of the threat posed by its business to the world’s climate. Its top executives have even professed a desire to rethink fossil fuels and move toward renewable energy sources. And yet it’s assuming immense operational risks to drill in the Arctic.

Shell executives don’t deny the apparent contradiction. “We do believe in climate change,” says Pickard. Shell’s Scenarios group, an in-house think tank that management points to as an emblem of its open-mindedness, has done extensive work undergirding the company’s support for government policies encouraging development of renewable energy sources, she says. But the Scenarios research also justifies aggressive exploration for more crude. With the global population rising from 7 billion to more than 9 billion by 2050 and total energy demand nearly doubling, “hydrocarbons are going to be needed for an awfully long time,” Pickard says. “That’s where Alaska fits into the picture.”

Even sympathetic observers find it curious, though, that Shell and Shell alone sees future profit in the Chukchi, especially after its misadventures there in 2012. Chevron, ConocoPhillips, ExxonMobil, Statoil, and Total have all put Arctic plans on hold. “Given the environmental and regulatory risks in the Arctic and the cost of producing in that difficult setting, assuming they ever get to producing, Shell must anticipate an enormous find—and future oil prices much higher than they are today,” says Nick Butler, a former senior strategy executive at BP who does energy research at King’s College London. “It’s a dangerous wager.”

. . .  the Scenarios process has gravitated from mystical intuition toward econometric modeling, according to more recent participants, but it retains at least a whiff of the transcendent. “We help create memories of the future,” Jeremy Bentham, who took over the unit in 2006, says in an interview.

Perhaps that helps when forecasting geopolitics. But on the environment, the Scenarios approach resembles a conscience-salving exercise that makes status quo strategies seem inevitable, former Shell executives say. As a result of Scenarios research, Shell in 1998 was one of the first major oil producers to acknowledge man-made climate change. For several years the company has even endorsed imposition of taxes on burning oil and other CO₂-emitting fuels, such as those enacted by some European countries. Bentham blames the U.S., China, and other major economies for failing to put their muscle behind this trend and impose levies that would create incentives to develop noncarbon alternatives. “We’ve lost 20 years collectively for the potential to moderate greenhouse gas emissions,” he says.

. . .

In Shell’s view, it has no real choice, he adds. It’s “the responsibility of oil and gas companies to meet that demand in as reasonable a way that they can.” As for Alaska, he says, the company thinks “it’s not about Shell exploring for hydrocarbons in the Arctic. It’s society that is demanding this energy.”

. . .

A Norwegian oil regulator [Pickard]’s friendly with reminded her recently that if Shell makes progress, other companies and nations will be emboldened to try the Arctic. “A lot’s riding on your performance,” the Norwegian told her. “The world’s watching you.”

Ah. Right. It’s not really OUR fault things are bad, and we certainly can’t do anything to make them LESS bad until the governments of the world force us to do the right thing, so in the meantime, in the very short-term, we’re going to keep on being what we think of as helpful. We are helpless! “Society” demands it!

I know people tend to keep believing things that will reaffirm the “world” they already live in, but this is some of the most remarkable bullshit.

Here’s a bonus quote:

If all goes well, Shell will drill through in late September, at which point Pickard says she’ll order the fleet to move south for the cold months. Shell will have to come back for 15 summers before “first oil” flows through an as-yet-unconstructed 70-mile seafloor pipeline to the Alaska coast and then a 350-mile overland connector (also yet to be built) to the Trans-Alaska Pipeline.

This is assuming their leases – which expire in 2017 – get renewed, but what could possibly go wrong in the course of 15 years and 420 miles of pipeline???

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About Fjothr Lokakvan

More or less Northern Tradition polytheist.
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2 Responses to Shorter Royal Dutch Shell: It’s society’s fault we’re drilling in the Arctic and we’re doing you all a service

  1. The Dutch. Ever the merchants :-(

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