Shell was wrongly awarded offshore oil leases in the Chukchi Sea near Alaska in 2008, a federal appeals court has ruled. The decision means that the oil giant’s plans to drill in the Arctic could now be delayed.
The blow to the company follows its issuing of a profit warning last week. It said its fourth quarter figures were expected to be “significantly lower than recent levels of profitability” due to “weak industry conditions”.
The court said that the US Interior Department had made arbitrary assumptions about development and had failed to consider the full range of environmental risks that drilling in the Arctic could pose. The agency must now analyse its decision and disclose the potential environmental impacts oil exploration could causes in the area.
Erik Graft, a lawyer at environmental law firm Earthjustice, said that drilling in the Arctic was simply “too risky” for both the region and the planet.
He added, “It makes no sense to open up the fragile, irreplaceable, and already melting Arctic Ocean to risky drilling for dirty oil that will only exacerbate climate change already wreaking havoc on the Arctic and elsewhere. The administration should halt drilling and cancel the Chukchi leases.”
A number of Greenpeace activists were arrested and accused of piracy in Russia last year whilst they were protesting about drilling in the Arctic. They were held for three months and then released.
Commenting on the court’s Shell decision, John Sauven, executive director of Greenpeace UK, said, “Shell’s spend in the Arctic tops $5 billion (£3 billion) with not a single cent in return for investors and now nothing in sight. The court decision means the US Interior Department has to go back to the drawing board before it can reissue any new licence to Shell. This is a massive blow to Shell’s Arctic oil drilling ambitions.
“Shell had already lost the case for Arctic drilling in the court of public opinion – [now] they have lost the case in the court of law as well.”