Shell’s Alaskan Arctic Exit and its Implications for Greenland

Royal Dutch Shell announced on Monday, September 29 that it plans to immediately suspend all offshore oil drilling in the Alaskan Arctic. Shell described the overall return from its $7 billion exploration for oil in the Alaskan Arctic as “fruitless,” and Monday’s announcement came following disappointing returns from a test well in Alaska’s Chukchi Sea. Shell’s decision to end drilling in Alaska has significant implications for other Arctic states, most notably, Greenland. The 2010 discovery of traces of oil below Greenland’s surface, and a subsequent rush to Greenland by several large oil companies, led many to believe that the island would soon gain the financial clout necessary to become independent from Denmark. However, falling oil prices and a lack of infrastructure caused three of these companies to leave Greenland in January 2015, and several more (including Shell) to postpone drilling operations until at least 2017, if not indefinitely. These events negatively impacted prospects for Greenlandic independence: political leaders went from predicting that independence would occur within their lifetimes to suggesting that the timeline had been pushed back several decades.

Shell’s decision to conclude offshore drilling operations in the Alaskan Arctic is not a guarantee that it will permanently suspend operations in Greenland. However, many scientists have speculated that Shell’s announcement implies a future pivot away from Arctic exploration, a decision which would undoubtedly diminish Greenland’s financial clout and provide another obstacle to achieving independence.