Oil industry leader Shell, short for Royal Dutch Shell PLC, has been forced to postpone their planned oil and natural gas exploration expedition into Alaska due to unforeseen problems with their oil containment apparatus.
Shell’s containment system was badly damaged during a test run conducted earlier this week. It is still unclear as to what the exact cause of the machinery failure during the test run was, but it has led to a major setback in Shell’s proposed Alaskan plans. Shell has already spent $4.5 billion over the last six years to motivate and prepare for this project, and this setback comes as a major blow.
According to some of the world’s most respected geologists, Alaska is the next frontier for oil and gas exploration. The icy state is thought to contain large amounts of oil and gas underneath its frosty soil, which could increase the domestic production of oil and gas drastically each year. With increasing shortages of oil and the resultant soaring crude oil prices, any such local source of natural energy is welcomed by the petroleum industry.
This latest problem simply adds to a long list of dilemmas that have impeded Shell’s dreams of petrochemical domination in the last few years. Stricter federal regulations, deep water wells that are difficult to access and heavy ice have all made this Alaskan expedition a challenging one. In addition, Shell is still trying to recover from the disastrous after effects of the Deepwater Horizon oil spill in the Gulf of Mexico, for which Shell had to pay out billions of dollars in environmental damages and personal injury compensation. Shell share prices recently increased by one percent, the first increase since the Deepwater Horizon incident.
According to a spokesperson from Shell’s production department, the Alaskan mission will not be aborted – it will simply be postponed until the equipment has been repaired and re-checked.
The system that is causing the furore is the Arctic Containment System that will be used to contain an oil spill in the event of an accident. In testing phases, the system was found to have a number of defects and does not meet the government’s strict safety requirements. Shell’s engineers will aim to make improvements to the system by the end of the year. Even if the required improvements are made in time, however, drilling operations will also be dependant on weather conditions. Drilling in Alaska’s treacherous winter may not be the wisest decision on Shell’s part, as ice accumulates on the ocean and may cause damage to rigs and drilling equipment.
