Controversial decision from Interior Department is conditional on availability of spill-response equipment, which is currently en route to Oregon for repairs

This article is more than 5 years old

This article is more than 5 years old

Barack Obama has removed one of the last obstacles to oil drilling in Arctic waters, granting Shell permission to bore two new exploratory wells.



However, the drilling permit granted by the Interior Department on Wednesday bans Shell from drilling into oil-bearing zones until critical spill-response equipment is in place – and that equipment is aboard a damaged icebreaker en route to Oregon for repairs.

The restrictions could severely limit Shell’s operations during the brief Arctic season, which winds down in late September. The company has spent $7bn and seven years trying to open up the Arctic to oil and gas drilling.

“Shell currently is not permitted to drill into oil-bearing zones,” Brian Salerno, director of the department’s Bureau of Safety and Environmental Enforcement, said in a statement on Wednesday.

The statement said the company would only be able to drill one well at a time and would have to wait to drill deeper into oil-bearing formations until the arrival on site of its capping stack, a critical piece of equipment in the event of a well blowout.

That capping stack is aboard the M/V Fennica ice breaker, which sprang a hole in its hull after navigating through shallow waters almost immediately after leaving the Alaskan port of Dutch Harbor earlier this month.

“Without the required well control system in place, Shell will not be allowed to drill into oil-bearing zones,” Salerno said.

The conditions puts further limitations on Shell’s plans to open up the Arctic for oil exploration.

An earlier decision from the Fish and Wildlife Service required Shell to keep active rigs 15 miles away from walruses and other wildlife.

The company had initially planned to drill the wells much closer, allowing Shell to move more easily between the two sites.

The new conditions following growing pressure from campaigners against Arctic drilling.

Al Gore, a former vice-president, said this month that drilling for new sources of oil in the harsh conditions of the Arctic was “insane” – especially given scientists’ conclusion that the majority of fossil fuels must stay in the ground to avoid dangerous climate change.

Al Gore criticizes Obama on climate change and 'insane' Arctic drilling Read more

But the potential short-term rewards for a company like Shell are enormous, with the Arctic ocean believed to contain about 20% of the world’s untapped and recoverable oil and gas reserves.

So far, the company has got in one short – and disaster-prone – season of Arctic drilling, after its Kulluk rig ran aground on an island in late 2012.

Since then, the Obama administration has imposed more stringent conditions – such as the requirement for a capping stack – intended to avoid an oil spill disaster in the Arctic.

However, campaigners said that even Wednesday’s conditions did not change their overall conclusion that it was a mistake to open up drilling in the Arctic.

The Natural Resources Defense Council said the permits were “misguided”.

Cassady Sharp, a campaigner for Greenpeace, noted that the discovery of the hole in Fennica demonstrated the perils of trying to drill for oil in the harsh conditions of the Arctic.

“By opening up the Arctic to oil drilling, President Obama is courting disaster and undermining his legacy on climate change. The world cannot afford to burn Arctic oil, and the consequences of a spill would be enormous,” she said in a statement. “ It it not too late for President Obama to finally come to terms with the disaster in the Arctic that could happen on his watch.”