Shell suspends Arctic oil drilling plans
September 29, 2015
By William Pentland On Monday, Royal Dutch Shell said it would abandon for the foreseeable future an intensely controversial plan to drill for oil off the coast of Alaska. Shell has backed a hugely expensive exploration effort in the region, but has failed to find significant oil deposits. A global supply glut has pushed oil prices far below levels needed to support high-cost oil projects like Shell's effort in the Arctic. In addition to the financial challenges, Shell has faced mounting pressure from environmental groups to drop its Arctic drilling plans. "Big oil has sustained an unmitigated defeat," said John Sauven, the executive director for Greenpeace UK. "The Save the Arctic movement has exacted a huge reputational price from Shell for its Arctic drilling program. And as the company went another year without striking oil, that price finally became too high." Shell had become an outspoken booster for developing the Arctic's oil and gas reserves. The oil major invested more than $7 billion exploring for oil in the Chukchi Sea and other areas of the far north. The decision to pull out will reduce Shell's future earnings by more than $4 billion. "Shell will now cease further exploration activity in offshore Alaska for the foreseeable future," said Marvin Odum, director of Shell Upstream Americas, in a statement. "This decision reflects both the Burger J well result, the high costs associated with the project, and the challenging and unpredictable federal regulatory environment in offshore Alaska." A growing number of energy experts have expressed doubts over the prudence of drilling for oil in the Arctic, including former BP chief executive John Browne. In 2012, Shell suspended exploration in the Arctic after a large drilling rig became unmoored and ran ashore. For more: © 2015 FierceMarkets, a division of Questex, LLC. All rights reserved. |