After years of accidents, Shell today (Aug. 17) received a final okay to drill for oil in the depths of the Arctic Ocean north of Alaska. The approval from the Obama administration means that Shell can drill deep under the Chukchi Sea in an area that may contain as many as 15 billion barrels of oil.
Shell’s insistence on drilling in the Arctic—while most other major oil companies are keeping an arm’s length distance from the extreme north—has caused some bafflement. One reason is oil prices, which seem likely to remain relatively low for years to come, while costs for drilling in the forbidding Arctic are extremely high. Already, Shell has spent some $7 billion in the mishap-prone venture, even before drilling a single well (the photo above is of the Kulluk, a drilling rig that ran aground in 2012 and last year was scrapped).
Then there are the environmental risks: Already, environmentalists are lambasting the White House for allowing drilling in the untouched north. “Today’s decision makes it final: President Obama is willing to allow the pristine Chukchi Sea to become an energy sacrifice zone and worsen climate disruption,” Marissa Knodel, of the Friends of the Earth, said in a statement.
The reason why seems grounded in the reality that, shale oil notwithstanding, crude oil remains scarce if you are thinking in terms of decades. At some point—perhaps toward the second half of the century—the cost of Arctic drilling will likely be more economical, and the need for its oil will probably be much greater.