Royal Dutch Shell: Drilling in the Arctic

Shell is a major contributor to the industrialization of the Arctic´s vulnerable ecosystem. While conducting preparatory drillings in the Arctic Ocean off the coast of Alaska, the Anglo-Dutch company encountered multiple embarrassing and costly safety problems confirming the inadequacy of their spill prevention and clean up protocols.

In 2013, Shell received a $390,000 penalty related to the grounding of the Kulluk Drilling Platfom in the Beaufort Sea, and environmental fines worth $710,000 from the EPA for the activities of their Noble Discoverer in the Chukchi Sea. At Shell´s 2013 annual general meeting, shareholders urged the company to reconsider its operations in Alaska. Critics doubted the company´s ability to drill safely in the Arctic Ocean. Local Inuit communities backed these concerns, stating that oil spills could affect their food security.

Shell also joined forces with Gazprom. In April 2013, following cooperation talks between President Putin and Dutch Prime Minister Mark Rutte, Gazprom signed a deal granting Shell a 33% share in its arctic drilling projects (see also a Greenpeace study on international oil companies in the Arctic). Despite these doubts and problems, Shell announced to resume drilling activities in July 2014, contracting Transocean Ltd.#

Both the US Coast Guard (April 2014) and the US Department of the Interior (March 2013) criticised Shell’s risk management practices and contractor oversight, saying Shell are “demonstrating a lack of respect for the unique risks inherent in Alaskan operations”1.

In 2014, Gazprom and Shell, decided to move on with the expansion plans for Sakhalin II in far eastern Russia. Shell acknowledges the technical challenges related to the Sakhalin plant, including artic conditions and seismic activity. A scientific report by the Hydrometerological Centre of Russia and others point out the specific problems related to oil-spills in icy conditions: “The performance of all known technologies for spill response in ice conditions is such that even when detecting a massive oil accumulation it can not be rapidly collected”2 . This becomes especially important considering the world’s last Western Gray Whales live in this area. According to International Union for Conservation of Nature (ICUN) an oil spill would of course be devastating to the whale population, but the population is currently stable.3

In February 2014 ShareAction, an organization seeking responsible investment, launched a campaign to call on investors “to stop Shell”. They want to make use of the shareholders´ power at Shell´s next Annual Meeting in May 2014. You can sign either a petition toward BlackRock as one of Shell´s biggest shareholders, or toward pension funds. These petitions align a report published by Greenpeace UK and others, “Frozen Future“, also directed at institutional investors.


  1. Rouse, L. (2014): As Shell gears up to drill the Arctic, investors must ask serious q questions: http://www.theguardian.com/sustainable-business/2014/sep/02/shell-alaska-arctic-oil-safety-failings-investors (accessed 25.09.2014) []
  2. WWF (2012):http://www.wwf.ru/resources/publ/book/eng/770 (accessed 27.09.2014) []
  3.  Western Gray Wale Advisory Panel (2014):http://cmsdata.iucn.org/downloads/wgwap_14_10_2013_wgw_distribution_report___final_en.pdf (accessed 25.09.2014) []
Case location
Beaufort Sea
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Affected topics
  • Environmental and Climate protection
Directly and indirectly (through shareholding) involved companies Indirect investors through shareholding

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