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Shell's Arctic Drilling Woes Keep Growing

By Sara Murphy - Dec 7, 2013 at 8:30AM

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Royal Dutch Shell wants to return to Arctic drilling after a colossal series of failures in 2012. Two new setbacks cropped up this week, adding to Shell’s many hurdles.

This week brought two significant setbacks to Royal Dutch Shell's (RDS.A) already labored efforts to revive its Arctic drilling projects in Alaska's Chukchi Sea. As one barrier after another interferes with Shell's plans, can it really be a good idea for the company to continue along this track?

Of grounded rigs and threatened species
This week's rough news for shell came double. First, the Department of the Interior is asking the oil and gas industry for some analysis of Chukchi reserves that would require significant expenditure to achieve. It's widely believed that the Chukchi is the most valuable, undeveloped oil reserve in the world, but the DoI wants it parsed according to what specific areas hold the most promise, so other parcels can be set aside as endangered-species habitat. That's a tall order for industry.

Second, environmental groups banded together to formally petition the Obama administration this week to halt Arctic drilling altogether. Their premise? That Shell's series of calamities in 2012 -- to include air permit violations and a grounded rig -- demonstrate that Arctic drilling cannot be done safely. Ouch.

Meanwhile, Shell's profits have taken a recent nosedive, and the company is losing its CEO and preparing for accession. And that's just on top of all the other hurdles that the company already faced to its prospective return to the Chukchi and Arctic drilling. In light of all this, can it possibly be a good idea for the company to stay its course? Watch the following video to find out more.

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