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Business News/ Opinion / The moral of the Kulluk
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The moral of the Kulluk

The oil in the Arctic Circle isn't going anywhere. Maybe two decades later the industry and govt will be in a position to drill for it

The Kulluk was an offshore exploratory drilling rig, owned by Royal Dutch Shell, which, in December 2012, ran aground in some of the most inhospitable waters in the world. Photo: Bloomberg Premium
The Kulluk was an offshore exploratory drilling rig, owned by Royal Dutch Shell, which, in December 2012, ran aground in some of the most inhospitable waters in the world. Photo: Bloomberg

The cover story of The New York Times Magazine on Sunday, The Wreck of the Kulluk, by McKenzie Funk, is one of those articles that you can’t put down even though you know how it turns out. The Kulluk was an offshore exploratory drilling rig, owned by Royal Dutch Shell, which, in December 2012, ran aground in some of the most inhospitable waters in the world.

Those waters were the Chukchi and Beaufort seas in the Arctic Circle, more than 1,000 miles from Dutch Harbor, Alaska, the nearest deep-water port. The rig, which had been towed—with great difficulty—to the Beaufort Sea, was in the process of being towed out again, barely two months after the drill bit touched the sea floor, before ice formations would make the route impassable. The Kulluk and its tow soon ran into a series of dangerous storms. Although no one died, Funk keeps you on the edge of your seat by describing in detail the hair-raising ordeal, which led to the tow captain of a rescue tugboat cutting the Kulluk adrift to ensure his own men’s safety. The Kulluk’s crew, meanwhile, was airlifted via helicopter, in a dramatic, and dangerous, rescue.

Funk also does a nice job laying out all the mistakes that Shell made. Despite spending $6 billion preparing to explore for oil in this remote part of the world, it didn’t plan adequately, and it cut too many corners. According to the Coast Guard, which investigated the Kulluk disaster, not only had Shell’s risk management been “inadequate", but there also had been a significant number of “potential violations of law and regulations".

I came away from Funk’s article, however, with another thought: Even if Shell had done everything right, what were the chances of something bad happening to the Kulluk or, more broadly, to any drilling programme in that part of the Arctic? They were high. Although this area is considered to hold one of the last great oil fields—with an estimated 23 billion barrels—is drilling for it worth the risks?

The first issue is the weather. Strangely, one of the reasons this remote location is at least theoretically accessible to oil companies is because of climate change.

“There is less ice, and it is receding from the shore," said Michael LeVine, the Pacific senior counsel of Oceana, an environmental group dedicated to preserving the world’s oceans.

But, he adds, climate change is also affecting the wind, the water and the currents. An area that was already remote, cold and dark is something else as well: unpredictable. Companies trying to explore for oil in the region are essentially flying blind.

Then there is the question of whether the government is up to the task of regulating such high-risk ventures. The answer is: probably not. Even after the Deepwater Horizon spill in the Gulf of Mexico—and despite some improvements in safety regulations—government regulation is still way behind the oil industry. “The technological capabilities and the need for oil companies to drill in more remote places has outstripped the government’s ability to keep up with it," LeVine told me.

There are a host of important environmental issues: The industry hasn’t gotten better at dealing with oil spills since the Exxon Valdez spill 25 years ago, for instance.

As regular readers know, I am hardly opposed to drilling for oil or gas. Yet this particular high-risk venture seems unnecessary. For one thing, the world is awash in oil, thanks to a slowdown in demand and increase in supply because of the fracking revolution. For another, the price of oil is so low as to make new, expensive exploration in the Arctic unprofitable. As LeVine put it, “I don’t believe we have the technological capability to extract these resources safely."

To me, that is the real moral of the story of the Kulluk.

Oil companies, of course, are fundamentally built to find oil. Shell had once embraced climate change and the need for renewable energy. But it eventually realized that it lacked the proper expertise, and it got rid of its investments in wind and solar to refocus on oil and gas. Now, like every other big oil company, it must explore for oil in evermore hostile environments, because those are the only fields left untapped. Despite its travails with the Kulluk, Shell has submitted a plan that would have it going back to the Chukchi later this year.

The oil in the Arctic Circle isn’t going anywhere. If, two decades from now, we need it, maybe by then the industry and the government will be in a position to drill for it—and regulate it—safely. But maybe we’ll get lucky. Or smart.

Maybe we’ll never need it at all. ©2015/THE NEW YORK TIMES

Joe Nocera is a New York Times columnist.

Comments are welcome at otherviews@livemint.com

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Published: 06 Jan 2015, 05:29 PM IST
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