Shell Oil Spill Re-Sparks Deepwater Drilling Safety Concerns
As oil continues to spill from a secondary leak at a Royal Dutch Shell (NYSE: RDS.A) offshore drilling operation in the North Sea, questions are resurfacing regarding the safety of deepwater oil exploration and development.
On Saturday, August 13, Shell said that an oil leak. which had sprung three days earlier at its Gannet Alpha platform in the Central North Sea 112 miles east off the shores of the British city Aberdeen, was under control.
Two days later, the company announced that around 216 tonnes (1,300 barrels) of oil had spilled into the ocean as a result of the leak and though this initial leak was under control a secondary leak was still being worked on. Shell estimates this secondary leak is spilling "less than 5 barrels a day."
Although this oil spill, Britain’s worst in 10 years, will not likely reach the amount of British Petroleum’s DeepWater Horizon disaster, which poured 4.9 million barrels of oil into the ocean, it has re-sparked concern and raised questions about Shell’s commitment to safety.
In March 2011, the United States federal government approved Shell’s deepwater drilling exploration plan based on new safety and environmental standards implemented in the aftermath of the BP oil spill. The approval was the first dolled out by the Obama Administration since the disaster occurred in the Gulf of Mexico.
But the safety measures outlined in the plan for the Gulf of Mexico have not stopped politicians in other countries from attacking Shell and offshore drilling. In New Zealand David Clendon, Green Party spokesperson called deepwater drilling risky business and one that New Zealander’s won’t benefit from.
Shell and fellow oil giant OMV Group have partnered to explore deepwater oil potential in the Great Basin, off the shores of the New Zealand.
Referring to Shell specifically, Clendon said, "Shell Oil just spilled more than 200 tons of oil into the North Sea, while OMV had a spill off the Kapiti Coast last year. There is no guarantee of safety in offshore drilling." He then attacked deepwater drilling in the aftermath of the BP oil spill saying, "There have been no significant technological advances in the safety of deepwater drilling in the last year."
At this point it is unclear how the oil spill will ultimately affect Shell’s earnings or deepwater oil exploration, but the company is facing an onslaught of old questions and rising concern. In July, Shell posted 2011 second quarter earnings that were up 77% from 2010 and income up $8.66 billion from $4.39 billion a year earlier.
Concern regarding the oil spil has yet to affect the company's stakeholders. Since the oil spill was announced by Shell last week, the company's stock value has risen $3.31and currently stands at $65.78.
Image Credit:eschipul via Flickr
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