Shell To Stop Offshore Oil Exploration In Alaska’s Arctic

Beyond the dry well, Shell said the decision to end its Arctic oil exploration is related to the high costs of the project and the “challenging and unpredictable federal regulatory environment” for offshore exploration in Alaska.


Royal Dutch Shell Plc will halt exploration in the U.S. Arctic after $7 billion of spending ended with a well off Alaska that failed to find any meaningful quantities of oil or natural gas.

Analysts at Liberum said Shell’s decision to abandon offshore drilling in Alaska could have a “material adverse impact” on the company’s third quarter results.

USA Today reports that the announcement was a major setback for the company, which had hoped that drilling off the Alaska coast would boost revenue.

A map of Shell’s summer 2015 Alaska operations. “This is a defining day for the Arctic”. An Interior Department spokeswoman said the department would continue to monitor the company’s activities as it scaled back its operations.

“The Save the Arctic movement has exacted a huge reputational price from Shell for its Arctic drilling programme”.

Opponents point to the treacherous conditions of the Arctic and the possibility of irreparable harm to the region’s delicate ecosystem in the event of an accident, as well as the overarching threat of climate change from the burning of fossil fuels like oil and gas. The governor also says he will stress the importance of the federal government allowing oil and gas drilling along the coastal plain of the Arctic National Wildlife Refuge.

After years of planning, billions of dollars invested, pitched battles with environmentalists and a crucial green light from the Obama administration, the news Monday from the energy giant Shell was unexpected, to say the least. Shell announced that it is also ending its efforts in the basin because of the expense, and the contentious regulatory climate in the area.

The withdrawal came six weeks after the final US clearance and three months after Shell was still defending the project, a rapid change of heart for such a large company that shows it is preparing for a prolonged period of low oil prices while trying to close its $70 billion takeover of rival BG.

“Some ideas are just non-starters, like drilling for oil in the Arctic Ocean”, said Audubon CEO David Yarnold in an email statement. “This may be the best chance we get to create permanent protection for the Arctic and make the switch to renewable energy instead. We need them to evolve so that our children can thrive”.


Environmental groups, who had staged media campaigns aimed at tarnishing Shell’s reputations and tried unsuccessfully to block Arctic-bound vessels with a string of kayaks, delighted in Shell’s disappointment. 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.

Shell pulls out of Alaska drilling