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Oil industry rebuts proposed Arctic drilling mandates

May 28, 2015 6:58 PM ETShell plc (SHEL) StockCOP, SHEL, EQNRBy: Carl Surran, SA News Editor32 Comments
  • Oil companies and industry trade groups lash out against the Obama administration plan to require rigs and time to drill relief wells in case of emergencies at their operations in U.S. Arctic waters, claiming the proposed rules would shorten an already brief window for exploratory drilling while dramatically boosting the costs of the operations.
  • The group also says the proposal would lock in the “same-season relief well” requirement even though rapidly evolving technologies might be a better solution when companies lose control of an Arctic well.
  • Similar arguments were delivered today by Royal Dutch Shell (RDS.A, RDS.B) and Statoil (STO), which both hold active leases in the Chukchi and Beaufort seas north of Alaska; ConocoPhilllips (NYSE:COP), another leaseholder in the area, filed comments that are not yet available.
  • A key sticking point is the same-season relief well requirement - not just the proposed rules for it, but whether it should be allowed in the first place; Shell is asking the Interior Department to replace the requirement with a mandate that oil companies demonstrate they have "assets that can address a source-control event."

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Comments (32)

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Oil from a Russian drilling accident would respect our borders,about like obama does.Just like Indian & Chinese air pollution won't bother us if we follow EPA regs.Yeah,right.
Robert & Sam Kovacs profile picture
I believe that exploration and safeguards to prevent ecological crises are NOT mutually incompatible. I may be an investor in RDS.a but I do not want profits at any cost.
No one here seems to care about the creation. Where I live used to be famous for dazzling coral reefs supporting a huge ecosystem. All gone.
Species are dying back everywhere. And now a last remaining environment is to be invaded, and not out of necessity, but only out of greed.
But in a world in which our great leaders are quite prepared to unleash nuclear armageddon on the living world in support of a massive pissing contest, what are we but M.A.D.?
It took me about 5 minutes to figure out what POO is or was...?
Think I'm getting too old for this...

The Artic drilling thing may be more to do with "Politics between Nations" than any other needs for demand..? (Staking out or laying claim as was mentioned)
Plus the fact that I think Alaska or their need for tax revenues or oil monies are dwindling and they want more to support the State..

And some E/P Companies are looking at replenishing their reserves or have the back-up at hand.
To stick all the problems of this on the Obama Administration is just a joke..
They just happen to be the current power in the White House at this time, nothing else...imo

There has been "controversy" about drilling in those areas for Decades.
And American's perceptions about disasters has come to the forefront, several times recently....So it's not just about the "Greenies"..
We have to have some control or regulation, otherwise the "greed of the few, will certainly overtake the common sense of the many"..

When and if Demand overtakes Supply down the road, maybe there will be safer methods to extract or produce crude, along with transportation...
And the time will be right to further exploration in some of those pristine areas.
It doesn't really appear that we need to go forward at this time..

long Oil, pipelines, refiners, coal and other energy..
HartStreet LLC profile picture
"It took me about 5 minutes to figure out what POO is or was...?"

Did you google it like me and references of poop were the only thing that should up lol. Our IT department is probably wondering why I'm so interested in the topic of human feces...
Drilling in off-shore Arctic waters is an insanity. The Fed never should have authorized; instead, re-visit Anwar on-shore.
HartStreet LLC profile picture
How is it insane? Drilling in Midland, TX is insane!! Have you gone through a west texas summer lol?! I'd prefer the arctic...
Oil supply and demand do not stay out of kilter for long, because price is the great balancer. When POO went over $100 drilling went berserk. When POO then went below $50 drilling collapsed. Now POO is nearing $60 brownfields drilling is on the rise again. It's a self-correcting system, until some idiot thinks they can control it better. Regrettably, S/D for idiots can stay out of kilter for very long periods.
Renewables? Like air? Like solar? Then where will nylon, plastics, etc come from if we stop drilling oil? Out of thin air? Let us keep drilling until there is no demand.
HartStreet LLC profile picture
People will buy whatever is cheaper. If solar and wind becomes so popular in 10 years that it's more than natural gas, we'll just start using natural gas. When natural gas begins costing more than solar and wind, then we'll switch back. Probably how its going to play out for a long time
Artspeed profile picture
I'd like to see oil usage decline. Oil transport decline. Oil refining decline. Oil drilling decline.

A window of opportunity exists this next decade or two for us to become more self-reliant -- self-sufficient -- as we seque' into energy-efficient renewables. Dependence on foreign oil seems to contradict these aims. I wish the Saudi's no harm, but what they do with their resources is their business.

If we squander this opportunity, shame on us.
"I'd like to see oil usage decline."

Yes, but when we look at world population increases, the desires by the majority of the world's population to increase their standard of living and the rate at which we can bring meaningful volumes of "renewable" energy to market, hydrocarbon based energy will be needed probably at increasing rates from where we are now...and for decades to come...

That is the reality...
Artspeed profile picture
Sure, we can go back to buying our oil from our Saudi friends?
J Mintzmyer profile picture
Why not? Let them squander away the only economic thing they got going for themselves. At least Saudi 'plays' friendly and actually invests in some decent things. Can't say the same for most oil exporters.
Old Rick profile picture
JM: Not sure if you were around in 73-74, but I was and I care not to sit in gas lines doing odd/even plate numbers again. As soon as you cede supply of anything, standby for the consequences.
satyr profile picture
Saudi plays friendly? I guess that is a relative thing. The American drillers who are going bankrupt because SA decided they were a nuisance may feel otherwise. But, their pain is nothing compared to those being slaughtered in Yemen at this very moment. That is a wholesale humanitarian disaster.
28 May 2015
I think everyone should stay out of the Arctic. It's just not worth the risk.
Wait 10 years then wait again and again. For what? Will there be less ice then? Let's get on with it, unless of course, there is a technology reason to delay.
J Mintzmyer profile picture
Why not save those risky assets for when we actually 'need' them. Oil is cheap. Of course the oil companies that have speculative leases are going to want to drill them...

I'm typically a fan of less regulation too, but go too far and let off too much and you get your Fukushima, your Deepwater Horizon, and your Bear Sterns...

Might be worth the risk if the economy is at risk due to insanely high oil ($200+).
markadams99 profile picture
Oil is not cheap, it's ludicrously expensive. It's cheap relative to your short adulthood, but dear relative to many decades before. $20 crude would be tremendously stimulative to the US economy and lift many out of poverty worldwide. Neither you nor I and certainly not Obama should be the arbiters of how much oil is the right amount.

The only argument against Arctic drilling is disturbance to a pristine environment, but that disturbance is miniscule, virtually undetectable in the Arctic vastness. And by the way most in the oil industry, but especially geoscientists, are environmentally conscious up the wazoo, both from business self interest and direct exposure to the raw beauty of the world.

Your allusion to Deepwater Horizon etc betrays a common fallacy. The actual effects of rare incidents like the Torrey Canyon, Exxon Valdez are insignificant in the context of man's general assault on nature and virtually undetectable after nature gets to work on the residues. Yum-yum. I write as one who is outraged by the harm done to individual animals in these events, but far more outraged by factory farms. The reason they are such a big deal is that they occupy a vast amount of mindspace of media with an agenda but little appreciation of or wonder at the stupendous engineering achievement of the oil industry. Just go to an offshore rig or a refinery if you get the chance and have it explained to you. You'll be astounded.

Anyway the more hydrocarbon the better, the cheaper the better, the more American (and British and Canadian) the better, and if it starts coming out of your ears, the free market will adjust the supply.
HartStreet LLC profile picture
"Why not save those risky assets for when we actually 'need' them."

Like others said, it takes about 5-10 years before we are actually developing an offshore lease. Its not like onshore where we drill some wells in about 3 months, find oil, and start developing all within 1-2 years. If we wait till we 'need' them, then we will have to await another 5-10 years before we can actually 'use' it. These regs are BS, drilling a relief well is not a primary method of well control.
obama hates oil.....capitalism.......
Agreed! The push into the Arctic has to do with politics and competition going on between the US, Russia, Norway, China, and others with coastline that can be claimed.
J Mintzmyer profile picture
I'm actually in favor of these regulations. Big time. We have an insane amount of oil oversupply right now and there's really no need for this exploration for another decade.

If global warming pans out then they will have time to drill relief wells when there's less ice floating around in a decade...
Go drill off the coast of Mexico.
From exploration wells to first oil can be about 10 years if not longer. It's always time for exploration
J Mintzmyer profile picture
Good point Grant, but as both an investor and a US citizen (no I'm not a 'greenie,' I actually own some coal plays and think TSLA is a bubble), I think we need to be responsible here.

We also don't need more oil supply. $200/oil and everything mainland is drying up (certainly not the case), then let's go to the Arctic and 'invade' ANWR.

For now let's consume the cheapest oil and preferably drain out Saudi Arabia first. Side note, but the whole foreign oil dependence thing is another crock. Long-term strategically thinking, not to mention efficient economics, drain the cheapest oil first. Let the Middle East have their little party. The haul and 'margins' they are getting on oil now will seem like a joke in 50 years, perhaps even 20-30.
Old Rick profile picture
WOW!! Insane oversupply? EIA estimates a current oversupply of around 1.3MBD for a demand of 93MBD. EIA also estimates that the S/D lines will merge in 2016 (94.83MBD supply, 94.58MBD demand.

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