Shell abandons Arctic oil search, after spending $7billion

Shell abandons Arctic oil search, after spending $7billion

Monday, September 28, 2015 2:42 pm


*Giant oil firm can further lose $4billion for withdrawing

 Ben van Beurden, Chief Executive Officer of Royal Dutch Shell, a

Ben van Beurden, Chief Executive Officer of Royal Dutch Shell, a

Royal Dutch Shell says it has abandoned its Arctic search for oil after failing to find enough crude.

In a statement on Monday in London, Shell said it had found indications of oil and gas in the Burger J well “but these are not sufficient to warrant further exploration.”

It said the decision to withdraw from the area reflected the results from the exploratory well, the project’s high costs and the unpredictable federal regulatory environment in the area off the U.S. state of Alaska.

Shell has spent about seven billion dollars on exploration in the waters off Alaska so far.
According to the firm, it can take a hit of up to 4.1 billion dollars for pulling out of the Chukchi Sea for the “foreseeable future”.

The unsuccessful campaign is Shell’s second major setback in the Arctic after it interrupted exploration for three years in 2012 when an enormous drilling rig broke free and grounded.

“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 nine billion dollars.

Environmental campaigners and shareholders have also pressured Shell to drop Arctic drilling.

Some are worried an oil spill would harm protected species while others are concerned about the cost after oil prices more than halved in a year.

Activists tried to interrupt Shell’s drilling plans in July by blocking an icebreaker vessel as they dangled from a bridge.

The decision is also the latest in a series of setbacks for projects in the Arctic trying to find oil and gas deposits estimated at 20 per cent of the world’s undiscovered resources.
*(Reuters/NAN)

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