We May Not See Arctic Oil For Decades
Shell’s Arctic campaign this year will be pivotal. If the company cannot find large reserves of oil, it will likely set back Arctic oil development for a generation.
The Financial Times reported that Royal Dutch Shell will not see Arctic oil come online anytime soon, even in the best of scenarios. Even Shell officials think that the oil major will not be able to see Arctic oil hit the market until sometime in the 2030s.
Related: Shell Approval May Trigger Resource Race In The Arctic
There are a few reasons for this. Finding and developing offshore oil can typically take around a decade. First there is a long lead time before any drills hit the waters – analyzing data, purchasing acreage, planning, doing seismic surveys, getting permits, moving equipment into place, and finally deploying rigs. Shell first started buying up Arctic leases in 2007. After years of preparation (and huge setbacks), Shell has done most of this pre-drilling work.
Even then, once the rigs ply the icy waters, there are many years ahead before oil begins flowing. Shell has to drill test wells, analyze data, and drill more wells.
But the Arctic also presents some unique challenges not found anywhere else. First is the short drilling season. Shell wouldn’t be able to operate year round, and could only make headway a few months out of the year during the summer. Perhaps more importantly is the remote location. Without adequate infrastructure Shell would have to do a lot of building to make Arctic oil viable. That would include pipelines, processing facilities, roads, and more. The Gulf of Mexico has all of this stuff in place, which reduces the cost and risk of drilling, but the Arctic is uncharted territory.
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