Miles beneath the wilderness of the Arctic Circle lies a potentially huge prize – but the risks are also huge. In an unforgiving climate where temperatures regularly drop as low as minus 50C, geologists reckon there are 400 billion barrels of oil and gas for the taking – enough to meet the world's energy needs for the next 125 years.
Getting it out is the problem. Royal Dutch Shell became the latest oil major to suffer a serious setback to its Arctic ambitions this week, as it was forced to postpone drilling until next year because of failings with its safety equipment.
An environmental lobby determined to protect the Arctic from invasive exploration also poses a major complication for Shell and its rivals BP and Gazprom, with safety concerns already to the fore following BP's Deepwater Horizon disaster in 2010.
Shell's decision to postpone drilling off the coast of Alaska in the Chukchi Sea was met with unalloyed triumph by Greenpeace, whose activists have been trailing the company's drill ship Noble Discoverer since it left New Zealand six months ago. Campaigners – with support from the likes of the actress Penelope Cruz and Sir Paul McCartney – say Shell's "Arctic misadventure is an expensive and risky mistake". The group managed to shut down more than 70 Shell petrol stations in London and Edinburgh in July, at a cost of 24 arrests.
Ironically, it is the receding ice-cap in recent decades caused by global warming which has opened up the Arctic for this latest plundering of its natural resources. Arctic exploration will also be under the political spotlight on Thursday when the parliamentary Environmental Audit Committee's report on protecting the region is published.
While Shell still plans to launch full-scale oil and gas drilling next year when it has corrected the mechanical faults in its spill containment system and gained the necessary permits, the latest delay effectively shuts off Shell's attempts to explore in the Chukchi Sea until next July because the drilling season ends next week. The delay will add millions to Shell's $4.5bn (£2.8bn) bill in the Arctic so far, having earlier faced delays when it had to shift its drill ship out of the way of a 30-mile by 12-mile ice floe.
Shell will continue to work off the coast of Alaska but will only drill the top parts of wells – so-called "top holes" extending down about 1300ft – before temporarily closing the holes and returning to them next year, creating a "strong foundation for 2013". The bullish statement to investors stated unambiguously that the exploration programme "remains critically important to America's energy needs, to the economy and jobs in Alaska, and to Shell".
But there are plenty of far less confident signals from the industry when it comes to Arctic exploration. In July BP shelved a $1.5bn offshore oil project in Alaska due to cost overruns and technical setbacks. The decision came after an 18-month review concluded that the Liberty project – an offshore field with about 100 million barrels of recoverable oil – was no longer viable. This was the second time in ten years that Liberty has been shelved due to cost concerns.
Russian behemoth Gazprom's Shtokman gas project in the Barents Sea has also fallen victim to cost overruns and falling gas prices in a slowing European economy. Gazprom – the major partner in the joint venture with France's Total and Norway's Statoil – came to the conclusion that "the financing is too high to be able to do it for the time being". The remote field is estimates to hold gas reserves of almost 4 trillion cubic metres.
Meanwhile Statoil itself is holding off from Arctic exploration until 2015 while it waits to see how Shell copes with the challenges. A spokesman said the firm was taking the "prudent step" of observing the outcome of Shell's efforts before finalising its own exploration timetable.
Unofficially, Shell is playing down the delays. Sources say the company is there for the long haul because its offshore Alaska wells are not due to produce commercial oil and gas until 2017. But analysts point out that the vast estimated reserves of oil and gas under the Arctic – 22 per cent of the world's recoverable oil and gas is supposed to be down there, according to the US Geological Survey – are just that: estimates. At the current oil price of $117 a barrel there is an economic case, but if prices fall steeply, that case could come under pressure.
Seymour Pierce oil analyst Sam Wahab said: "Compared to the cost of drilling a well in the Falklands – say around £80m – Arctic exploration is much more expensive. It depends what's down there but you may need an oil price of $75 a barrel-plus." With pressure from environmentalists unlikely to ease, it's now up to Shell to make the numbers stack up and hold its nerve where rivals are losing theirs.