Royal Dutch Shell to end exploration in offshore Alaska
28 Sep 2015
Royal Dutch Shell PLC said it was calling off exploration in offshore Alaska for the foreseeable future, after an exploratory well drilled to 6,800ft (2,100m) found oil and gas but not in sufficient quantities tp make exploration viable.
Shell US' president, Marvin Odum, early today announced in the Netherlands that it was a disappointing outcome for that part of the Chukchi sea basin.
Shell drilled in 150ft (45m) of water about 80 miles (130km) off Alaska's north-west coast however the exploratory which was the first in the Chukchi in 24 years yielded little oil or gas.
The drilling activity was opposed by environmental groups who say more greenhouse gases would harm polar bears, walrus and ice seals.
In the summer, protesters in kayaks tried to block Arctic-bound Shell vessels in Seattle and Portland, Oregon but to no avail.
Shell had spent around $7 billion on Arctic offshore development in hopes of finding deposits worth pursuing.
The Anglo-Dutch oil giant said it was likely to be hit by charges for the decision and would update the market later on the financial implications of the move.
The company is carrying a $3-billion exposure on its balance sheet for the assets and a further $1.1 billion in contractual committments, totalling $4.1 billion (£2.6billion).
"Shell continues to see important exploration potential in the basin, and the area is likely to ultimately be of strategic importance to Alaska and the US. However, this is a clearly disappointing exploration outcome for this part of the basin,'' said Odum.
The company was last to forced to suspend drilling three years ago when its Kulluk drilling rig washed up on the coast of Alaska in 2012 following a storm at sea.
The cost of the failed attempt to find oil in Chukchi cost Shell was $5 billion.
The Arctic is said to be one of the last great frontiers in oil exploration.
According to estimates by energy consultants Wood Mackenzie, the region straddling territory belonging to Russia, Alaska, Norway, Greenland and Canada may hold as much as 166 billion barrels of oil equivalent.