Shell and the Arctic

The oil and gas industry is capital and technologically intensive, and Shell’s experience demonstrates that even after spending billions of dollars there can be limited tangible results. This case allows the instructor to discuss how the upstream oil and gas industry works and the risks associated with complex exploration projects in areas such as the Arctic. The pros and cons of the oil and gas industry in the Arctic should create a good discussion. The case also provides a foundation for discussing risk assessment and management. Did Shell do adequate risk assessment of the entire project and, more specifically, of the towing plan that resulted in the grounding of the Kulluk? The instructor could also use the case to discuss industrial accidents and their root causes. Shell had several near misses in the project, such as the near grounding of the Noble Discoverer drillship. The near misses could have been indicators of problems with the overall project, which raises questions as to how they should have been interpreted and incorporated into Shell’s risk assessment.