Shell set for Arctic return three years after rig mishap

U. S. officials were poised Tuesday to give Royal Dutch Shell the goahead to restart a controversial oil exploration campaign in the Alaskan Arctic despite fears over the risk to the environment.

The Department of the Interior was understood to be close to approving the Anglo- Dutch oil major’s request to return to the Chukchi Sea within the Arctic circle. It comes just three years after Shell’s last attempt to find oil in the region floundered when its Kulluk drilling rig ran aground.

The company has already spent $ 5 billion in its last failed search for oil in Alaska but believes the region’s vast untapped reserves warrant the potential financial and environmental risks of returning.

Despite the slump in oil prices to about $ 50 per barrel, operators are prepared to continue searching for crude in the Arctic. According to estimates by energy consultants Wood Mackenzie, the region straddling territory belonging to Russia, Alaska, Norway, Greenland and Canada may hold as much as 166 billion barrels of oil equivalent.

Tapping oil and gas reserves held under the Arctic will be vital to meeting expected global energy demand beyond 2040.

The International Energy Agency says total energy demand will increase by 37 per cent over the next 25 years and without new reserves the world could face a catastrophic shortfall in oil and gas. However, the anticipated move by the Obama administration to sanction Shell’s plans in Alaska drew criticism from environmental lobby groups. “It’s an indefensible decision,” said Greenpeace Arctic campaigner Ian Duff. “The Arctic is melting rapidly because of climate change. But instead of seeing it as a warning, Shell sees profit.”