Shell has no success with Alaskan drilling

Climate change even seemed to be co-operating, making the northern sea routes passable to drilling vessels and supply ships.

Royal Dutch Shell’s has revealed that it will quit Arctic exploration for the foreseeable future.

The industry was always aware that drilling for oil and gas in areas like the Arctic posed significant operational and logistical challenges, apart from the problematic relations with politicians and environmentalists.

But the company announced that its one well drilled this summer “found indications of oil and gas, but these are not sufficient to warrant further exploration”. “A lot of money was spent and those multipliers are pretty big”.

Queary said Foss is waiting to hear whether Shell will use Terminal 5 further. “They had a budget of billions, we had a movement of millions”.

“Other companies who held leases in the OCS were waiting to see what happened with Shell“, said Moriarty in an email. Today’s news from Shell is a painful reminder that exploration is expensive, involves huge risk, and does not guarantee success.

Shell’s decision is welcome news for environmental groups. Foss expects a hearing examiner to rule on the dispute in the next week, Queary said.

Environmentalists, meanwhile, welcomed news that Shell will suspend its operations. The company says many reasons factored into its decision. It ended up with the grounding of its drilling rig, the Kulluk, and at least eight of its contractors faced felony charges and fines totaling .2 million for environmental crimes such as discharging dirty water into the ocean and improper record keeping of equipment failures. “The complication was that they were under contract to Shell”.

A transition to production could have taken a decade or longer. “But this was about a change in the political winds, basically”.

Shell made it clear, however, that this might not be forever. Let there be no doubt: protest does make a difference.

Cassady Sharp, Arctic Media Officer at Greenpeace, told The Christian Science Monitor that the recent protests “crystallized more than before” because of “really wonderful visual spectacles, voices included”.

Known in the industry as turning up a “dry hole”, it’s common for exploratory drilling to find little to no oil, especially in formations that have not been explored much in the past.

“We are pleased that Shell has finally come to grips with the reality that drilling in the Arctic makes no sense”, Andy Sharpless, chief executive officer of the nonprofit Oceana, said by email.

The Pacific Northwest has served as a key staging ground for Shell’s Arctic fleet and for environmental protesters who oppose drilling there.

“Big oil has sustained an unmitigated defeat”, said John Sauven, the executive director for Greenpeace UK.

The company has about $3 billion in balance sheet carrying value and further $1.1 billion in future contractual commitments. In a press release today from the The Hague, Netherlands, the company said it made the decision following disappointing results from an exploratory well it just completed.

Oil prices have plummeted in the past year.

The cost of oil being at record lows has not helped the company either, as it seems unlikely the price will rebound anytime soon, making it all the more hard for the company to recoup its Arctic investment.

The drilling effort in the Chukchi Sea may mark a close to an Arctic oil fever ignited in 2008, when the US Geological Survey issued a report saying that a few 13% of the world’s remaining oil lay in the north-perhaps as much as 90 billion barrels of oil.

Shell is the major leaseholder in the Chukchi.

Regions like the Arctic “are one of the areas that, if we’re going to be able to do this, we need to examine”, he said.

But Miyoko Sakashita, oceans program director for the Center for Biological Diversity, urged Shell not to try again.

“Alaska is a long-term play”, van Beurden said in a conference call in August.