Feds Allow Shell to Drill for Oil in Arctic Ocean Off Alaska

Shell is betting that it will find a giant pool.

The latest update on the Royal Dutch Shell plc’s (ADR) (NYSE:RDS.A) Arctic drilling is the most recent permit granted to the company by the US offshore regulator, the US Bureau of Safety and Environmental Enforcement (BSEE).

“This is yet another bad decision for our fragile Arctic Ocean and a risky one”, Cindy Shogan, executive director of the Alaska Wilderness League, said in a statement. The absence of the vessel had prevented authorities from allowing deep drilling to take place as the Fennica carries key safety equipment, which is designed to plug wells in the case of an emergency. The BSEE said that the capping stack is now in the area and deployable.

Experts believe the Arctic contains 13% of the world’s undiscovered oil reserves – around 90 billion barrels.

The decision comes four days after Obama released a video previewing his upcoming trip to Alaska. “The people will continue to call on President Obama to protect the Arctic and our environment.” The oil companies have not demonstrated they can clean up a spill in water choked by ice, the activists say, referring to the 2010 Deepwater Horizon oil spill disaster.

Upon receiving the news of BSEE’s final approval for the Burger J well, Shell told OE: “With modifications to our Application for Permit to Drill (APD) approved, we are now authorized to explore hydrocarbon-bearing zones at our Burger J well site”.

Shell has been drilling the well for more than two weeks. The company was given provisional permission to drill in July but was held up by damage to the Fennica icebreaker carrying the requisite capping stack to the region. Shell has not yet found any oil or natural gas since it started drilling in 2007.

The approval came from the Department of Interior as the last in a series of permits that the company needs to begin doing exploratory drilling in the Arctic seas.

Shell spokesman Curtis Smith said it’s possible Shell will complete a well this summer. “Given what we know, it’s not worth the risk of drilling”. “Safe, efficient operations will ultimately determine the progress we make”.

A second drillship, the Noble Discoverer, is stationed nearby at the Burger V prospect, but it cannot drill while the Polar Pioneer is drilling under federal rules dictating simultaneous drilling must occur at sites 15 miles apart.