It may be the most expensive oil well ever. Royal Dutch Shell invested $7 billion into an oil drilling exploration in the Alaskan Arctic. Monday, though, the company announced it did not find enough oil and gas to go forward, and “for the foreseeable future” Arctic oil and gas will stay in the ground.
Shell’s is not the only Arctic failure this year. Drilling in the Russian Arctic is also on hold, as well as in the waters above Norway.
“Right now the Arctic is shut down effectively,” said Steven Kopits, managing director of Princeton Energy Advisors. “These oil prices do not support Arctic exploration and drilling anywhere in the world right now.”
Of course, when oil prices go back up, Big Oil may return.
But that collides head-on with the idea of a global carbon budget: to keep the planet’s warming below 3.6 degrees Fahrenheit — and a new study published Monday finds the world is on course for a 6-degree rise — just a fixed amount of fossil fuels can be burned.
Researchers at University College London modeled what that might look like, assuming the market decides where to drill.
“That is, you burn the cheapest resources first,” study author Paul Ekins, an economics professor at University College London, said. “And you leave the rest in the ground. And a notable result is that we didn’t burn any Arctic resources at all.”
His point is, Arctic drilling has proven remote and extremely expensive.
The real-life question is, how to implement a carbon budget so energy companies stay away from the region when oil prices rise. One answer: don’t let them rise.
“I often describe this problem as a cookie jar that we have to walk past for the rest of human civilization without dipping our hand in,” said environmental scientist Steve Davis of the University of California, Irvine.
For cookie monsters, that’s impossible — unless, of course, a tastier treat arrives. For Davis, that’s renewable energy, enough to push down demand for fossil fuels and thus the price.