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Green groups warn Shell boss over ‘reckless’ pursuit of Arctic oil

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Green groups warn Shell boss over ‘reckless’ pursuit of Arctic oil

Screen Shot 2015-08-13 at 11.35.25EXCLUSIVE: WWF chief executives write to Ben Van Beurden as Greenpeace and Oil International unveil new report highlighting Arctic drilling risks

By Jessica Shankleman  |  14 Aug 2015

Green groups have stepped up pressure on Shell over its plans to drill for oil in the Arctic, with WWF leaders writing directly to the oil giant’s chief executive to express their “profound alarm” at the project.

In a letter sent on Wednesday and seen by BusinessGreen, David Nussbaum and Johan van de Gronden, chief executives of the UK and Netherlands branches of WWF, warned Shell chief executive Ben Van Beurden Arctic drilling would derail efforts to reduce greenhouse gas emissions.

“Drilling in this fragile habitat is riddled with risks for local communities and for the environment, including species that depend on the sea ice, such as polar bears and bowhead whales,” the letter states.

“The reckless pursuit of hydrocarbons is also incompatible with tackling climate change,” it added.

Earlier this week, Shell confirmed it was planning to restart its mission to drill for oil in the Chukchi Sea off the coast of Alaska, after the arrival of a key safety vessel called the Fennica.

The Polar Pioneer rig began drilling on July 30 but US government rules restricted Shell from drilling to depths where oil could be reached until the Fennica was in place.

Shell insists it can drill safely in the Arctic, and remains subject to strict environmental rules. In an interview with the BBC, due to be broadcast in the Autumn, Van Beurden maintained he has been on a “personal journey” in assessing the risks of Arctic development and concluding the project is justified.

But WWF’s chiefs said drilling in the Arctic was “a recipe for disaster”. They urged Shell to redesign its business plan in a way that it compatible with the internationally agreed 2C average temperature target.

The intervention comes as a report published yesterday by Oil Change International and Greenpeace USA argued that US Arctic offshore oil should be regarded as an “untouchable” fossil fuel reserve if the world is succeed in its aim of preventing global warming from exceeding two degrees celcius.

The report concludes the supply of Arctic oil into the global economy would cause global temperates to rise by at least five degrees Celcius by the end of this century.

“There is no reasonable scenario in which Arctic oil drilling and a safe climate future co-exist,” said report author Hannah McKinnon, senior campaigner with Oil Change International, in a statement. “Drilling in the Arctic is a climate disaster, plain and simple.”

The report argues the world already has access to fossil fuel reserves that can not be burned if we are to stand a reasonable chance of limiting temperature increases to 2C, and as such tapping new sources of high cost and high risk oil from the Arctic is unnecessary.

Shell has already invested almost $7bn in its Arctic drilling programme, and has still yet to drill into any oil bearing rocks. The company was forced to suspend its Arctic programme in 2012, after facing persistent diffuculties that culminated with one of its rigs washing ashore on an Alaskan beach.

The authors of the report warn Shell’s Arctic drilling rigs could therefore become devalued and represent a stranded asset risk for investors. It cites a recent study in the journal Nature, which found no Arctic oil should be produced in a “climate safe” scenario.

Their hypothesis is somewhat bolstered by the International Energy Agency’s (IEA) latest forecasts, which this week predicted the glut of oil on the global market that has led to a collapse in prices will continue well into 2016.

The IEA said global oil supplies continue to grow at “breakneck” speed, raising questions about the financial viability of high cost oil produced in the Arctic.

Green groups are not alone in voicing concerns about the risks associated with Arctic drilling. In the same BBC programme which heard Van Beurden seek to assure the public over drilling risks, Lord Browne the former BP chief executive, said he was not “a great supporter” of Arctic drilling.

“I’m not chairman of Shell. But I think [Arctic drilling] is very expensive and I would always go for hydrocarbons which have less cost and effort involved,” he said in an interview for an upcoming Radio 4 documentary entitled Climate change: Are we feeling lucky?

“Some companies will genuinely believe – they may be right – that they can produce oil safely and environmentally securely in extraordinary conditions,” he added. “[But] I’ve never been a great supporter of right-on-the-margin development, partly because of the cost. So I think you’ve got to be careful what you do and cost includes your long-term reputation.”

A spokeswoman for Shell defended its venture, arguing fossil fuels will continue to play a major role in the energy mix for may years to come and as such it was necessary to explore for new reserves.

She said the company was focused on helping to meet the world’s growing demand for energy while reducing CO2 emissions.

“Shell is actively engaged in developing solutions to the global energy challenge,” she said. “We are pioneering Carbon Capture and Storage technology, calling for a robust global price on carbon, and producing more gas, the least CO2-intense hydrocarbon. We are working with many constructive NGOs and other organisations on these and other issues, in order both to raise the level of public understanding of the energy challenge and to ensure that the world moves towards a lower-carbon, higher energy future.”

However, green groups around the world appear to remain pretty much united in the view that Arctic oil has no place in any debate about the world’s future energy mix.

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