In Huge Blow, Shell Gives Up on Offshore Arctic Drilling

Company blames regulation, disappointing results
By Newser Editors and Wire Services
Posted Sep 28, 2015 3:49 AM CDT
Updated Sep 28, 2015 5:56 AM CDT
Shell Gives Up on Offshore Arctic Drilling
A small boat crosses in front of an oil drilling rig as it arrives in Port Angeles, Wash., aboard a transport ship after traveling across the Pacific.    (Daniella Beccaria/ via AP, File)

Royal Dutch Shell says it will cease exploration in Arctic waters off Alaska's coast following disappointing results from an exploratory well backed by billions in investment and years of work. This is a huge blow to Shell, which was counting on offshore drilling in Alaska to help it drive future revenue. Environmentalists, however, had tried repeatedly to block the project and welcomed the news. 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 offshore drilled to 6,800 feet but yielded disappointing results. Backed by a 28-vessel flotilla, drillers found indications of oil and gas but not in sufficient quantities to warrant more exploration.

Shell will end exploration off Alaska "for the foreseeable future," the company says, because of the well results and because of the "challenging and unpredictable federal regulatory environment in offshore Alaska." Environmental groups had warned oil exploration in the ecologically fragile Arctic could lead to increased greenhouse gases, crude oil spills, and a disaster for wildlife. "Polar bears, Alaska's Arctic, and our climate just caught a huge break," the oceans program director for the Center for Biological Diversity said in a statement. "Here's hoping Shell leaves the Arctic forever." Analysts say that since the Chukchi and Beaufort seas contain an estimated 26 billion barrels of recoverable oil, further exploration in decades to come is probably inevitable. (More Alaska stories.)

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