Shell ceases Alaska Arctic drilling after exploratory well disappoints

The company will abandon the Burger J well in Alaska’s Chukchi Sea, saying indications of oil and gas weren’t sufficient to warrant further exploration.

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

The company’s exploration in the Arctic was approved this spring and as been met with fierce opposition from environmentalists.

Environmental campaigners, who tried to interrupt Shell’s drilling plans by blocking an icebreaker vessel as they dangled from a bridge, welcomed the news.

Royal Dutch Shell will cease exploration in offshore Alaska, following disappointing results from an exploratory at the “Burger J well” which is approximately 150 miles from Barrow, Alaska, in about 150 feet of water.

Shell said its Alaskan position is valued at about US$3 billion with a further US$1.1 billion in future contractual commitments and it would give the value of writedowns with its third-quarter results.

“However, this is a clearly disappointing exploration outcome for this part of the basin”, he said. The Burger J well will be sealed and abandoned.

“The company said it took into consideration the project’s high cost and the “unpredictable federal regulatory environment in offshore Alaska” in deciding to stop the exploration”.

The sector has been hit by a slump in the oil price – thanks to a glut of supply – with a barrel of Brent crude remaining below 50 USA dollars, less than half its recent peak of almost 116 U.S. dollars in June previous year.