Arctic sea ice and oil drilling

This week has held several precedential events in Arctic policy, with both record low sea ice extent and changes to plans for Arctic oil exploration and production.

According to a preliminary report by the National Snow & Ice Data Center, this week Arctic sea ice appeared to have reached its minimum extent for the year of 3.41 million square kilometers (1.32 million square miles).  Sea ice extent refers to the area of the Arctic Ocean and its nearby seas covered by sea ice.  While the seasonal climate appears to have turned to conditions favoring more sea ice for the fall and winter - colder temperatures and the setting Arctic sun - the September 16, 2012 sea ice extent represents the lowest seasonal minimum extent since the satellite record began in 1979.

Coincidentally, the next day Royal Dutch Shell plc announced that it will suspend its Arctic oil exploration and production efforts in the U.S. Chukchi Sea until next summer.

Earlier this month, a Shell subsidiary began preliminary drilling at its leased Berger prospect site, located about 70 miles off the coast of Alaska.  But one day after the Noble Discoverer drill ship began drilling at the site, advancing sea ice forced the ship to retreat to a safer location.

Oil spill prevention and containment is essential in any offshore drilling operation, and may be especially so in the Arctic given the sensitivity of the environment and the challenges posed by sea ice.  This month Shell tested its Arctic Containment System, but during a final test a critical containment dome was damaged.  Between the dome's failure to meet Shell's acceptance standards, concerns over operational safety amidst ice floes, and steps taken to protect local whaling operations, Shell announced this week that it has revised its plans for the 2012-2013 exploration program.  Rather than drilling into hydrocarbon zones this year, Shell plans to drill top holes - think of pilot holes that stop short of the oil-bearing layers -  and then cap and temporarily abandon the wells until next summer.

The market pressures driving Shell and other upstream oil companies to prospect for Arctic resources will likely remain for the foreseeable future.  But some political forces are questioning the wisdom of Arctic oil production.  Yesterday the Environmental Audit Committee of Britain’s House of Commons called for an international moratorium on oil and gas drilling in the Arctic until the eight-nation Arctic Council establishes universal standards for spill or other disaster response, as well as strong financial safeguards to ensure spills are both deterred and capable of full remediation.