Shell Oil, the first energy company granted coveted Arctic drilling permits by the US Government, is shutting down operations for all of 2013, nearly as quickly as they began. Shell’s hand is being forced by the Interiror Department, following a scathing report which castigated the company for a series of misadventures in 2012 and early 2013.
The cancellation of this year’s drilling program represents an about-face from the confident predictions made last year by the Shell executive heading up the operation, David Lawrence. The Arctic drilling would be “relatively easy”, Lawrence told Dow Jones at the outset of Shell’s foray into Alaska’s Beaufort and Chukchi Seas.
The report by the Interior Department, released earlier this month, found Shell was unprepared for Arctic drilling and failed to properly oversee its contractors. Department Secretary Ken Salazar put it succinctly on a telephone press conference discussing the report. “Shell screwed up in 2012,” remarked Salazar, who stipulated that future drilling would be contingent on more detailed plans and an independent audit of the company’s management systems.