What Shell Oil's Arctic drilling ambitions mean for Alaska

Alex DeMarban

Talk to folks with Royal Dutch Shell for any length of time and you walk away thinking they're holding a handful of aces. The company is on the eve of exploratory drilling off Alaska’s coast, the first such efforts in some two decades.

What are the company's prospects of striking it big? Shell normally gives itself 1-in-20 odds of discovering commercial quantities of oil when it sinks a drill bit.

But in the little-explored region of the Chukchi and Beaufort seas -- which are part of the Arctic Ocean and include the very spots where Shell pierced the seafloor in the 1980s and 1990s -- the company pegs its odds at better than 1 in 2.

What does Alaska get out of it? As it turns out, under federal law, the state won't benefit much from oil royalties, though Alaska's congressional delegation is working to change that. Still, Shell's development, which could total tens of billions of dollars, would generate tens of thousands of jobs, in part if the company embarks on building hundreds of miles of pipelines.

This three-part series looks at Shell’s plans to drill for offshore oil in Alaska’s Arctic and how that could forever change the state.

  1. 1 Shell readies to roll dice on multibillion-dollar bet in Arctic Alaska

    Part I: Shell normally gives itself 1-in-20 odds of discovering commercial quantities of oil during exploration. But in Alaska's Arctic, Shell believes it has 1-in-2 odds of striking it big. And that could forever change the state.

  2. 2 Will offshore oil development in Alaska's Arctic make state rich? Don't count on it.

    Part 2: If Shell strikes it rich off Alaska's Arctic shores, the federal government will earn billions of dollars in oil royalties. Alaska will get very little -- even as the trans-Alaska pipeline fills up with crude.

  3. 3 Shell's biggest regulatory challenges in Arctic Alaska may yet lie ahead

    Part 3: Already looking beyond exploration, Shell has spent tens of millions of dollars studying potential routes for what could be at least 350 miles of Arctic pipelines to carry its offshore crude to the 800-mile trans-Alaska pipeline.