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Environmental risk of drilling in Arctic too high, CEO of oil giant Total says

LONDON -- Energy companies should not drill for crude oil in Arctic waters because the environmental risks are too high, Total SA Chief Executive Officer Christophe de Margerie told the Financial Times on Wednesday.

The newspaper, which operated behind a pay wall, described de Margerie's comments as the first time a major oil company has publicly criticized offshore exploration in the Arctic.

The risk of an oil spill in such an environmentally sensitive area was simply too high, according to de Margerie.

"Oil on Greenland would be a disaster. A leak would do too much damage to the image of the company," he said.

Earlier this month, Gazprom OAO delayed the start of oil production at its Prirazlomnoye field, the first Russian Arctic offshore oil deposit to be developed, due to safety concerns.

A report from the National Snow and Ice Data Center shows the Arctic's melting ice is resulting in the lowest sea ice levels since satellites started tracking the measurements in 1979. NBC's Brian Williams reports.

The Arctic is seen as a key source in the next decade for Russia, the world's largest oil producer.

Plans to drill for crude in the Arctic have raised concerns among environmental activists, who launched protests last month at the offshore platform that operates the Gazprom project.

Shell admits Arctic drilling defeat, for now

Earlier this month Royal Dutch Shell PLC had to abandon hope of drilling into oil reservoirs in the Chukchi Sea off Alaska after its containment dome was damaged during tests.

Environmentalists pointed to those setbacks as more evidence that offshore drilling in the Arctic is too risky.

Sen. Mark Begich, (D-AK), discusses what a delay in Arctic drilling means for the future of oil prices and exploration in the U.S.

"Letting Shell do top-hole drilling and other preparatory activities when they are clearly not ready to respond to an oil spill is like telling a drunk driver that as long as he stays off the freeway everything should be OK," said Rebecca Noblin, Alaska director of the Center for Biological Diversity, after Shell won approval to carry out additional preliminary drilling off Alaska -- this time in the Beaufort Sea.

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The remoteness, the extreme cold and the threat from ice floes crushing equipment pile more costs on top of those imposed by restrictions on drilling during hunting and breeding seasons and requirements for expensive emergency equipment to be on standby.

And industry executives acknowledge that the economics of Arctic exploration is also shaky.

NYT: China joins nations seeking treasure in warming Arctic

Nevertheless, Shell and other international oil and gas companies are moving into the Arctic because of increasing resource nationalism and dwindling production in their traditional heartlands of the Middle East, South America, the United States, the North Sea and elsewhere.

Persistently high oil prices are also making the huge engineering challenges of working in such a hostile environment look more worthwhile. In addition, the climate change that burning hydrocarbons contributes to has pushed back the ice, opening up access to, and markets for, the hydrocarbons there.

Arctic sea ice reaches new low, shattering record set 3 weeks earlier

The prize of success could be huge. The International Energy Agency (IEA) estimates that some 30 percent of the world's undiscovered natural gas and 13 percent of its oil is waiting to be exploited in the Arctic.

Reuters contributed to this report.

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