Shell backs away from Arctic drilling

Shell has discovered traces of oil and gas at its offshore Alaska exploration well, however these are not sufficient to warrant further exploration in the Burger prospect, the company said in a statement on Monday. The company also said it would not be returning to drilling in the Alaskan waters any time soon.

According to Shell, the Burger J exploration well, located in Alaska’s Chukchi Sea, approximately 150 miles from Barrow, in about 150 feet of water, will be sealed and abandoned.

“The Shell Alaska team has operated safely and exceptionally well in every aspect of this year’s exploration program,” said Marvin Odum, Director, Shell Upstream Americas. “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.”

Shell will now cease further exploration activity in offshore Alaska for the foreseeable future, the company said, explaining that the decision reflects both the Burger J well result, the high costs associated with the project, and the challenging and unpredictable federal regulatory environment in offshore Alaska.

“The company expects to take financial charges as a result of this announcement. The balance sheet carrying value of Shell’s Alaska position is approximately $3.0 billion, with approximately a further $1.1 billion of future contractual commitments. An update will be provided with the third quarter 2015 results,” Shell said in a statement. Shell holds a 100% working interest in 275 Outer Continental Shelf blocks in the Chukchi Sea.

Senators write to Obama

Several U.S. senators on Friday sent a letter to the U.S. president Barack Obama, urging the Obama administration not to approve oil drilling off the coast of Alaska.

Sen. Bernie Sanders (I-Vt.), Sen. Sheldon Whitehouse (D-R.I.) and 10 of their colleagues today sent the letter.

“At a time when our planet is warming due to climate change, the last thing our environment needs is more drilling,” Sanders said. “What we need is for Congress and the White House to move toward clean energy such as solar, wind and geothermal.”

The senators argued that allowing more drilling would be inconsistent with the president’s stated goals for controlling climate change and poses serious risks to wildlife and natural resources.

Sen. Jeff Merkley (D-Ore.), Patrick Leahy (D-Vt.), Ben Cardin (D-Md.), Al Franken (D-Minn.), Richard Blumenthal (D-Conn.), Brian Schatz (D-Hawaii), Martin Heinrich (D-N.M.), Ed Markey (D-Mass.), Cory Booker (D-N.J.) and Gary Peters (D-Mich.) also signed the letter.

Greens rejoice

Environmental groups and parties have expressed joy upon hearing of Shell’s decision to pull away from drilling in the Arctic.

Greenpeace International Executive Director Kumi Naidoo said: “This is a defining day for the Arctic. It’s a huge victory for the millions of people who stood up against Shell and a disaster for other oil companies with interests in the region. Shell has gambled big and lost big, both in terms of financial cost and its public reputation. This has become the most controversial oil project in the world, and despite its bluster Shell has been forced to walk away with nothing.

“It’s time to make the Arctic ocean off limits to all oil companies. This may be the best chance we get to create permanent protection for the Arctic and make the switch to renewable energy instead. If we are serious about dealing with climate change we will need to completely change our current way of thinking. Drilling in the melting Arctic is not compatible with this shift.

“Greenpeace’s campaign to save the Arctic will continue with passion and increased strength. We are campaigning for a protected sanctuary in international waters around the North Pole, and we hope that vision is one step closer after today.”

Rod Downie, WWF Polar Programme Manager said: “Today the Arctic has seen a reprieve from Shell’s irresponsible drilling. Their reckless $7 billion pursuit of oil in this fragile icy habitat puts local people and wildlife, such as polar bears, at risk.

“Shell should now set out to concerned shareholders and the public how it intends to transition its business model to one which is compatible with tackling climate change.”

Natalia Bennet, leader of the Green Party of England and Wales commented: “Shell and other oil and gas companies do not have a good track record when it comes to environmental safety. As we head to the Paris climate change talks later this year, global leaders must make a commitment to ensuring that fossil fuel reserves are kept in the ground, as the science dictates. We cannot allow Shell and others to return to the Arctic.”

The article has been amended to include statements by conservation groups and the Green Party of England and Wales.

Offshore Energy Today Staff