The drilling project also held the hopes of Alaska, which has seen oil production and revenues decline sharply in recent years, and the US oil industry, which looked to Alaska’s offshore Arctic as the next source of oil big enough to keep the country among the top three oil producers in the world along with Saudi Arabia and Russian Federation.
“The entire episode has been a very costly error for the company both financially and reputationally”, said analysts at Deutsche Bank, who estimate the Shell’s Arctic exploration project could cost the company about $9 billion.
Shell said that the indications of oil and gas found in the Burger J well are not sufficient to carry out further exploration in the Burger prospect.
“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. Shell and the oil exploration from just that one company is just a small part of it”.
Puppeteers transport Aurora, the double decker bus sized polar bear, from in front of Shell headquarters in London as Greenpeace activists celebrate Royal Dutch Shell’s decision to stop Arctic oil drilling.
Shell has pegged Arctic reserves at 400 billion barrels of oil.
Current Politics: President Obama surprised many observers by approving Shell’s request to begin Arctic drilling earlier this year, which could have set off the birth of an offshore oil industry in the Arctic Ocean.
Shell has spent upward of $7 billion on Arctic offshore exploration, including $2.1 billion in 2008 for leases in the Chukchi Sea off Alaska’s northwest coast, where an exploratory well about 80 miles off shore drilled to 6,800 feet but yielded disappointing results.
Environmental groups oppose drilling in the Arctic due to the vulnerability of animals already struggling to survive because of melting sea ice, as well as risk that a spill could pose to the region. Over the summer, protesters in kayaks unsuccessfully tried to block Arctic-bound Shell vessels in Seattle and Portland, Oregon.
Baldino said about 400 people work in Anchorage on the Arctic drilling effort.
“Certainly, we would think a $47 barrel of oil would be a bigger issue than Shell pulling out”, Hartley explained.
The announcement comes as Shell’s window for drilling in the brief Arctic summer draws to a close.
Walker says he’s contacted the White House to set up meetings about the impact of Shell’s decision on the state. “This has become the most controversial oil project in the world, and despite its bluster Shell has been forced to walk away with nothing”.
Noting the President’s trip, Susan Murray of the green group Oceana observed: “Shell’s announcement today allows the government to take a step back and apply careful planning, precaution and science to forge a sustainable future for the Arctic”.
Royal Dutch Shell’s dry hole in the Chukchi Sea may be disappointing to shareholders, but it’s potentially devastating to Alaska.