Here’s some very good news for the planet—and for Alaska—though not for Shell. The Guardian reports that the US government is canceling some offshore leases and imposing stricter conditions on Arctic drilling. As a result, Shell and other oil companies are unlikely to pursue further exploration in that part of the world. The Guardian:
Barack Obama blocked off the prospects for future oil drilling in the Arctic on Friday, imposing new lease conditions that make it practically impossible for companies to hunt for oil in the world’s last great wilderness.
The Department of Interior said it was canceling two future auctions of Arctic offshore oil leases in the Chukchi and Beaufort seas, and turned down requests from Shell and other oil companies for more time on their existing leases.
The decision will come as a further blow to Shell, which invested seven years and $7bn trying to find oil in the Arctic but came up dry….
Sally Jewell, the interior secretary, said the decision to cancel auctions scheduled for 2016 and 2017 was dictated by current economies for oil, and the harsh conditions of hunting for oil in the Arctic which had forced Shell to pull out….
Jewell added that the Interior Department would not be renewing existing oil leases held by companies such as Shell and Statoil beyond the current expiration date of 2020.
Thanks to those kayaktivists in Portland and Seattle, and thanks to climate activists all over the world, Shell and the rest of Big Oil are no longer getting a free pass. It’s a good start that they now realize there’s no money to be made in places like the Arctic and the Amazon. But it’s equally important for them to see that we don’t need to find any more oil, anywhere. Since 80 percent of current fossil fuel reserves must remain in the ground if we expect to have a habitable planet 40 years from now, it’s time to stop looking.
It’s also time to stop lying, as Exxon has done for the last few decades. As that sordid history is laid bare, Big Oil is in retreat. If the companies do not change their basic business model, and soon, they will follow the path of Eastman Kodak, which acted for too long as though the demand for film photography would never go away. It did. The demand for oil, too, will soon be much lower than Exxon and Shell now imagine. The energy world is changing, and they are not.
Investors in oil companies must also realize the risk they are taking. Unburnable reserves now constitute most of Big Oil’s putative worth. But these reserves will soon be recognized as stranded assets and removed from the balance sheet, and oil will begin a long downward slide—just like coal. And like film photography.