Shell targets the Arctic

Ben van Beurden has entered the polar bears' den.

After predictions that Shell might well give up on its Arctic adventure following a collapse in the oil price, endless legal challenges and operational headaches that saw one of their rigs catch fire and a drilling barge run aground - today the oil giant has announced it is restarting operations.

Or at least it would like to.

It still doesn't have the correct drilling permits and is facing court actions.

But if these matters can be sorted out - and that's an IF probably worth writing in capitals - Shell's chief executive told me that the oil major hoped to start exploratory drilling again this summer.

Two years ago the oil giant announced a "pause" in its operations in Alaska which were first given the go-ahead a decade ago. The decision came after a string of controversies which you can read about here.

But it is now clear a pause did not mean the end of the project.

"We didn't abandon all the infrastructure, you cannot, for such a large and complex operation, scale down and scale up whenever you want," Mr van Burden told me.

"We have been preparing all this for a potential return."

Simon Henry, Shell's chief financial officer, made the point with numbers.

It will cost Shell just over $1bn to restart operations this year.

And it will cost just under $1bn to keep the project approximately mothballed.

"The potential in the Arctic is very, very significant," Mr van Beurden said.

Some estimates suggest that there are as many as 24 billion barrels of oil under the Arctic, enough to satisfy America's thirst for hydrocarbons for more than three years.

"We believe that the Arctic probably holds the largest yet to be discovered resource base," the Shell chief executive said.

The oil major is clear. This is exploring for "potential oil" rather than actual reserves it knows are there.

Shell has already discovered gas and the judgement is that there is likely to be a large oil rim around the field.

The company believes there is a better than 50% chance of finding oil.

Now, for something that is indisputably risky, some might see that as a pretty low percentage.

Certainly, Greenpeace doesn't think it is worth it.

"Despite announcing cuts [to other investments] Shell hasn't taken the opportunity to cut its most high-cost, high-risk project," Charlie Kronick from the pressure group said.

"Shell is taking a massive risk doggedly chasing oil in the Arctic, not just with shareholder value, but with the pristine Arctic environment.

"A spill there will be environmentally and financially catastrophic. It's time for investors to recognise that it's impossible for Shell to justify its continued pursuit of offshore Arctic oil."

Of course, Mr van Beurden is not ignorant of the issues.

"I am very much aware of these concerns. We share the concerns," he said, arguing that there would be "multiple lines of defence" for the environment.

"We are as well prepared as any company can be, to mitigate the risks and to make sure we can deal with consequences if there is an issue.

"But I know it is an issue that divides society. There is always going to be a difference of opinion about drilling in the Arctic. I don't think we will ever be able to convince everyone that this is the right thing to do."

He then goes on to make a broader point.

"It is however true that the world does need more hydrocarbons for many years to come.

"The energy system is going to double again in its size in the first half of this century. We will need a significant amount of renewables and oil and gas to actually meet that demand.

"Oil companies have been there for many, many years. Let's not think that the Arctic is untouched. There have been many activities there which have been very successful without any spills in many, many decades."

Shell will need to be ready for a prolonged fight.