Better late than never: Shell and Statoil pull out of the Arctic

So persistence does really pay off.Shell Goodbye Arctic

Photograph: Frolair

It was announced in September 2015 that due to facing a ‘mountain of opposition from environmentalists and achieving disappointing results’, Shell was to abandon its drilling in the Alaskan Arctic (Washington Post, 2015).  And if that wasn’t good enough news for the general public and wider environmental community, two months later the Norweigan oil company Statoil was also to withdraw from the Arctic because their work there was “no longer considered competitive within Statoil’s global portfolio’’ (Oilprice, 2015).

The news of both companies comes as a global relief, as activists and NGO’s spent years protesting in defence of the Arctic’s natural beauty. An article by the BBC (2015) said that Shell did not find sufficient levels of oil and with oil prices already at $55 a barrel, it was a risky endeavor with no guarantee of success.

However, despite this comment made by the corporation it was said that after 3 years of heavy campaigning, which included a giant man made polar bear outside the doors of Shell HQ, senior executives conceded that the protests had a bigger impact than expected, and damaged the company’s reputation.”(Greenpeace.2015). So it is possible that an activist group can change the mind of a multi billion pound oil corporation.

Shell in the Arctic

Photograph: Backbone Campaign

The withdrawal of these two companies sends a strong message to other corporations that corporate greed will only get you so far, and that together these campaigning groups and activists have more powers of persuasion that ever.

There were huge capital costs and dangers facing Arctic exploration however, it was an area that was rich in oil and minerals. The estimated 90 billion barrels of oil and 1,669 trillion cubic feet of natural gas now believed to be located in the Arctic incentivized many corporations like Shell to explore (Arctic Economics, 2012). However, the Arctic’s fragile eco-system presented significant environmental and societal risks and costs to Arctic economic development. Increased onshore and offshore Arctic drilling enhanced the risk of potential oil spills.

It was concluded that the opportunity cost of drilling in the Arctic was too severe for both Shell and Statoil, and the risk was simply not worth taking (Arctic Economics, 2012).

The actions taken by these two corporations highlights the future for oil exploration. As oil prices continue to be on a downward trend, and companies look to obtain new sources, the recent news could spur a possible shift away from oil exploration, where companies such as Shell can start to invest more in renewable technology in order to ensure long run sustainability.

References

BBC News, (2015). Shell stops Arctic activity after ‘disappointing’ tests – BBC News. [online] Available at: http://www.bbc.co.uk/news/business-34377434 [Accessed 26 Dec. 2015].

Centre for Strategic and International Studies, (2014). Arctic Economics in the 21st Century: The Benefits and Costs of Cold. [online] pp.565-567. Available at: http://csis.org/files/publication/130710_Conley_ArcticEconomics_WEB.pdf [Accessed 30 Dec. 2015].

Fidei, T. (2015). 5 Ways that People Power Helped Defeat Shell | Greenpeace UK. [online] Greenpeace.org.uk. Available at: http://www.greenpeace.org.uk/blog/climate/5-ways-people-power-helped-defeat-shell-20151005 [Accessed 26 Dec. 2015].

Mooney, C. (2015). Following in Shell’s footsteps, oil major Statoil will also exit the Alaskan Arctic. [online] Washington Post. Available at: https://www.washingtonpost.com/news/energy-environment/wp/2015/11/17/following-in-shells-footsteps-oil-major-statoil-will-also-exit-the-alaskan-arctic/ [Accessed 26 Dec. 2015].

Tully, A. (2015). Following Shell, Statoil Withdraws From Arctic Alaska | OilPrice.com. [online] OilPrice.com. Available at: http://oilprice.com/Latest-Energy-News/World-News/Following-

Photograph of Arctic Banner: Greenpeace Switzerland

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