Statoil Exits Alaska, Calls Chukchi Leases No Longer Competitive

Statoil will also close its office in Anchorage, Alaska, the company said.

Statoil looks at two things when evaluating its portfolio: financial strength and longer-term performance.

Norwegian oil major Statoil said on Tuesday it will pull out of Alaska’s Chukchi Sea, just weeks after Royal Dutch Shell abandoned the treacherous waters there after spending billions on oil exploration work.

“Since 2008 we have worked to progress our options in Alaska”.

Following this, the company will exit 16 of its operated leases, and stake in 50 leases, which are operated by ConocoPhillips (NYSE:COP); all of these are in Chukchi Sea. The leases were awarded in a 2008 lease sale in Alaska and expire in 2020. The Chukchi Sea is estimated to hold about 15 billion bbl of recoverable oil, and about 76 Tcf of recoverable natural gas.

Earlier this year, Shell faced public outcry when it sent an oil rig to the Chukchi Sea for exploratory drilling.

“Our understanding of the challenges and opportunities has increased considerably over the a year ago”, Dodson commented. “This gives Statoil a unique position and experience which the company will continue to apply going forward”, says Dodson. It was denied a lease suspension last month, after the government said the company hadn’t shown a “reasonable schedule of work”.

Statoil had previously requested that it be granted a suspension because of current regulations. Sullivan rather bluntly blamed the Obama administration for the outcome: “I don’t think that most Alaskans could have imagined that it would be our own federal government that would kill, through over burdensome regulations and uncertainty, the great promise of energy development in the Arctic [outer continental shelf]”.

That’s in part because of the Arctic’s hard environment and high cost at a time of plunging oil prices, Symons said.

Shell in September announced plans to drop its Arctic exploration after a well testing its Burger J prospect in the Chukchi Sea was a disappointment. The oil giant also cited what it called challenging and unpredictable federal regulatory environment in offshore Alaska.

“That certainly would have enhanced the commerciality of our leases”, Symons said.