Divide and fall? Total criticise Arctic oil drilling

26 Sep 2012 admin

As Andy Rowell wrote this morning, “this is big news”. Total are the first major oil company to publicly state that companies should not be drilling for oil in the Arctic. A divide amongst the oil majors will only increase pressure on companies, like Shell, who despite having to abandon this years drilling plans, still plan to pursue Arctic drilling.
Speaking in an interview to the Financial Times Christophe de Margerie, Total’s Chief Executive, said an oil spill in such an iconic wilderness was a PR disaster they just weren’t prepared to risk:

Oil on Greenland would be a disaster. A leak would do too much damage to the image of the company.

Not that Total are ruling out drilling in the Arctic, Total still has a number of gas projects in the region including a stake in the giant Arctic Shtokman gas field in the Russian Arctic. De Margarie commented that gas leaks were easier to deal with than oil spills, and, perhaps crucially for Total’s PR bods, they look less dramatic when mixed with pristine white ice.
Of course Total are quite prepared to expose themselves to bad PR: they have been heavily criticised for gas flaring in the Niger Delta and for funding Burma’s military junta. What the Chief Exec’s comments actually show is how difficult unprofitable Arctic drilling is now looking.
As Nick Butler, the man who served as go-between for Tony Blair and former BP CEO John Browne, commented in the Financial Times last week, Arctic oil extraction is at the ‘outer limit of commercial viability’. Initial attempts have hardly been encouraging: Shell have run into one technical problem after another, leading them to abandon this year’s drilling plans when a crucial piece of safety equipment broke. Cairn Energy spent $1bn exploring off Greenland and failed to find commercial volumes of oil. Even Total’s favoured Shtokman project has run into trouble after Gazprom, one of the other companies in the project, announced excessive costs made the project unfeasible.
As the Environmental Audit Committee found last week the oil companies have recklessly rushed into drilling in the Arctic without demonstrating how they’d deal with the devastating consequences of a spill. Total’s criticisms will not just put pressure on Shell but also on the British Government who have been only too pleased to support British companies‘ Arctic ambitions. If even other oil companies are breaking ranks to criticise Arctic drilling – surely it’s time the UK government admitted they were wrong too.

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