Already a month behind on its plans to start drilling in the Arctic Ocean off the Alaskan coast, Shell Oil is suddenly in a position where less may be more.
A series of mishaps and bad breaks appear to be making a dent in Shell's goal of starting five exploratory wells by mid-July — two in the Beaufort Sea and three in the Chukchi Sea on Alaska's northern coast.
Now, assuming the Interior Department approves final permits in the next few weeks, the earliest Shell can begin drilling is mid-August.
Shell's head of U.S. operations, Marvin Odum, has said that with an August start, three wells instead of five would be more realistic. It may also be essential, because Shell and its backers know that if at least some work isn't started this year, environmentalists will have another full year to build legal and political obstacles. In recent months, opponents have launched fake websites and Twitter accounts criticizing Shell's plans. They're also planning to build on the momentum of Shell's recent mishaps in appeals for federal regulators to reject the company's permits.
That hearkens back to what happened last year with the Keystone XL pipeline, the proposed project to carry oil from Canada's tar sands to Gulf Coast refineries. After boisterous environmental protests last summer and fall, President Obama delayed issuing a final permit for the project, and it remains stalled today.
If Shell's permits are not approved this year, the company has to wait a full year to start again, as drilling in the Arctic is possible only during the summer season from July through October.
Despite the opposition from environmentalists — most of whom are Obama supporters — a start to Arctic drilling this year could help the president's reelection campaign by serving as a counterpoint to Republican charges that he opposes new domestic oil production. This political reality adds to the pressure on Interior to move swiftly on Shell's permits, which makes some offshore-drilling experts a little nervous.
With all of the obstacles Shell is facing, Interior's former top drilling regulator, Michael Bromwich, acknowledged that "clearly the window is narrowing" for the administration to make a decision in 2012.
But Bromwich, who oversaw the overhaul of the department's offshore-drilling arm after the BP oil spill, warned that "people shouldn't feel hurried along by the mere fact of the closing of the window."
Shell has already spent some $4.5 billion to get to this point, and it has no intention of letting things slide. "We'll make the most of the time we have in each location," Shell spokeswoman Kelly op de Weegh said last week.
Even its strongest backers in Congress concede that the initial drilling may have to be scaled back.
"If it means that they have to do less, I think they have accepted the fact that they will have to do less," Senate Energy and Natural Resources Committee ranking member Lisa Murkowski, R-Alaska, said last week.
Still, Alaska's Democratic senator, Mark Begich, isn't too concerned that a delay would enable environmentalists to turn Shell's project into another Keystone controversy.
"Keystone or this project — they're happening," Begich said confidently in an interview last week. "I no longer question if we're going to develop the Arctic; it's how we're going to develop it."
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