Excerpts:
The Arctic was a long-term investment – Shell would not start production on such a big project in such a distant place until at least a decade after it found oil – but the future is always getting closer, and by 2010 the company was anxious. It took out ads in newspapers, hoping to pressure the Obama administration into opening the Arctic. One pictured a little girl reading in bed, a figurine of a polar bear next to the lamp on her nightstand. “What sort of world will this little girl grow up in?” it asked. If “we’re going to keep the lights on for her, we will need to look at every possible energy source. . . . Let’s go.”
Even with permission, getting to the oil would not be easy. The Alaskan Arctic has no deepwater port. The closest is in the Aleutian Islands at Dutch Harbor, a thousand miles to the south through the Bering Strait. In the Inupiat whaling villages dotting the Chukchi coast, only a handful of airstrips are long enough for anything other than a prop plane. There are few roads; human residents get around in summer by boat, foot or all-terrain vehicle. Shell was trying the logistical equivalent of a mission to the moon. During the short Arctic summer, when the sea ice made its annual retreat, Shell would have to bring not only the Kulluk but everything else: personnel, tankers, icebreakers, worker housing, supply vessels, helicopters, tugboats, spill-cleanup barges and a secondary rig to drill a relief well in case of a blowout. In the wake of Deepwater Horizon, Shell would build a $400 million Arctic-ready containment dome, an extra layer of spill protection that it would also need to drag north.
Shell accepted the resignation of the executive in Houston overseeing exploration in Alaska and the rest of North America, a 29-year veteran of the company. It became the subject of multiple reviews and investigations by the Coast Guard, the Interior Department and the Environmental Protection Agency. One investigation resulted in felony charges for Noble, one of the subcontractors. And instead of adding to its reserves, it was burning through them. In early 2014, Shell issued a surprise profit warning, the first since the reserves scandal a decade earlier.
Little about the increasingly extreme hunt for energy had changed. Shell still needed oil. The Chukchi and Beaufort Seas had oil. Shell still had its leases, and in August, and as oil hovered around $100 a barrel, the company announced its intention to return to the Arctic. Its new exploration plan called for placing two rigs in the Chukchi, to maximize the exploration time between the ice’s retreat and its return. One rig was a replacement for the Kulluk: equally massive and also lacking propulsion, but not round. It would have to be towed. The other was the Noble Discoverer, which had been refurbished yet again – deemed unable to leave Alaska on its own power in 2013, it had been hauled to South Korea on a larger ship – and was now 49 years old. The company also announced that it would improve safety measures and more closely manage its contractors. “All to say we’ve taken a critical look at the experiences we’ve had in Alaska over the last several years,” Curtis Smith, a Shell spokesman, told The Times in August, “and this exploration plan takes those learnings into account.”
The oil giant lurched forward, seeming to regain power with every step: a joint venture in July with Inupiat villages, a September meeting about the Arctic at the White House, progress in November in a legal fight over drilling the Chukchi. The future looked promising but for one thing. In September, almost as soon as Shell had submitted its exploration plan, oil began a free fall. The price dropped from $90 a barrel that month to $80 in October and to $70 in November – the point at which unconventional oil tends to become uneconomical. Last month, the price went as low as $55 a barrel, the lowest in five years. On the two-year anniversary of the wreck of the Kulluk, the Arctic, at least for now, had stopped making any sense.
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