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The Arctic just opened for oil business

Shell’s window for drilling in the Arctic Ocean just opened, setting off a high stakes race to start pumping the largest untapped oil reserve on Earth.

To the outrage of environmentalists, Shell’s window for drilling in the Arctic Ocean officially opened on Wednesday, setting off a high stakes race to start pumping the largest untapped oil reserve on Earth.

Under the terms of the plan, approved in May by the Obama administration, the company has from July 15 to September 28 before it has to retreat ahead of plunging temperatures and heavy weather. In that time Shell hopes to sink at least one drill bit through the icy water, confirm the presence of oil, and prepare a wellhead for production – before the company’s leases start expiring in 2017.

The exploration is already among the costliest, most complicated, and controversial in the history of hydrocarbon fuel. Three years ago Shell’s flotilla of rigs and support vessels chugged confidently toward the Chukchi Sea, about 70 miles off the untamed coast of northern Alaska. Even before they arrived, however, problems developed.

READY: Fight over oil drilling near the Arctic Ocean

The company’s special spill containment system failed a test run. One of its rigs lost anchor and drifted. Another rig, the Kulluk, later ran aground and was totaled. The contractor in charge ultimately plead guilty to eight felony charges related to the wreck. But worst of all, Shell drilled just two of its five planned exploratory holes, and those only to a partial depth. 

Since then, Shell has shaken up its Arctic team and tightened controls on a smaller number of contractors. But the challenges continued last week. A gash opened on the hull of one of the company’s ice breakers, forcing the ship all the way back to Oregon for repairs. Shell is also awaiting at least one more drilling-specific permit from the Bureau of Safety and Environmental Enforcement, the wing of the Interior Department responsible for offshore drilling.

But after investing ten years and six billion dollars just to get to this moment, Shell says it's poised for success this summer.  The company’s two rigs—the Polar Pioneer and the Noble Discoverer—are in Dutch Harbor, Alaska, along with dozens of support vessels and seven aircraft. They’ll depart “in the days to come to commence drilling on our Chukchi leases on or about the third week in July,” according to spokesperson Curtis Smith. 

The Chukchi Sea is already ice free this year, almost three weeks earlier than average over the last decade. Shell points to this as a stroke of good fortune, but others see it as an ironic, unfunny sign of the apocalypse. Like most drilling in the Arctic, Shell’s effort is partly a controversy about polar bears and vulnerable undersea wonders. A spill could be especially deadly for the environment. The help is further away. The weather is more challenging. Plus, the cold complicates every aspect of a clean-up.  

In a series of protests this past spring, however, activists framed the issue in much broader terms. This isn’t about polar bears anymore, they argued. It’s about the survival of the planet. It’s about the need to change everything in the face of catastrophic climate change. A research letter published in the journal Nature brought the point home. To avert some of the worst outcomes, the authors concluded “all Arctic resources should be considered as unburnable.”

“We need a broad social revolution,” said Ahmed Gaya, who helped organized several large scale protests this spring in Seattle, where Shell staged for the Arctic. “Shell’s irresponsible efforts in the Arctic are the most potent symbol we have of the climate crisis and of the kind of corporate capitalism that is driving the climate crisis system.”

RELATED: Undeterred by past failure, Shell targets Arctic for drilling

Under that intellectual banner, thousands of protesters turned out this past May and June, waving “Shell No” flags at the entrance to the company’s terminal. Other protesters slipped into kayaks and swarmed the company’s massive rigs. They never expected to stop Shell's progress north, but the campaign put a brighter bulb in the spotlight on Shell’s work— and the Obama administration’s decision to approve it.

"The Obama administration seems to be leaving the fate of the Arctic up to Shell this summer," said Travis Nichols, an organizer for Greenpeace. "But that doesn’t mean the future of the Arctic has to be in Shell’s hands." 

Late last month, after activists called attention to it, federal regulators forced Shell to scale back its plans once again. The company wanted to drill two simultaneous wells within 15 miles of each other in the Chukchi Sea. That’s a violation of established noise protections for polar bears, walruses and other wildlife, the government ruled.  

Still, Shell is pressing on. It’s the only major oil company with an active plan in the Arctic. ConocoPhilips, ExxonMobil, BP and Chevron have all suspended activity in the area. That leaves Shell a clear shot at the rewards: the equivalent of 29 billion barrels of oil and gas, according to federal estimates.

In a wide-ranging phone interview, spokesperson Curtis Smith addressed the company’s thinking, the opposition to its plan, the shifting price of oil, and whether there is a contradiction between Shell’s recognition of climate change and its ambitions in the Arctic.  

Yes, he acknowledged, oil prices are down right now. But it will take at least a decade to bring Arctic oil to market, he continued. By then it’s Shell’s view that oil prices will rise with a doubling of global demand by 2050. “What you have are hundreds of millions of people who are becoming energy consumers,” he said. “We feel that the oil and gas trapped underneath the Chukchi and Beaufort Seas—responsibly developed—could go a long way to meeting that energy challenge.”

Yes, he acknowledged, activists have tried to make Shell’s plan a climate change issue. But that’s just their latest strategy, he argued. “They’ve tried everything over the years. They’ve tried everything,” he said. “They teamed up with Coca Cola to try to make it a polar bear issue, and now it’s a walrus issue, and then there wasn’t enough science—and now it’s a climate change issue. It’s everything. Whatever sticks on the wall has been used to stop this.”

But perhaps Shell’s coldest calculation is the one that Smith left unsaid. The company knows—and openly acknowledges—the need to reduce carbon emissions, or face the threat of climate change. So why does it continue to probe the ocean floor for another oil patch?

McKenzie Funk is the author of a definitive account of Shell’s last foray into the Arctic, and he thinks he knows the answer: Shell doubts the world will do much of anything to address climate change. That, in turn, will set off a race for the earth’s remaining oil and gas deposits—a “scramble” in the words of Shell’s in-house scenario planners.  

In the Arctic this month, the scramble may be about to begin.