The oil and gas company Shell has decided to halt its drilling operations in the Arctic. The news comes after an exploratory well yielded “disappointing” results when searching for resource deposits.
Shell has come under fire in recent years for its continued search for oil in the Chukchi Sea, primarily from the environmental activist group Greenpeace.
Arctic Drilling Stopped For “Foreseeable Future”
The Anglo-Dutch group, having been consistently optimistic about finding fossil fuels in this part of the Alaskan Arctic, will see this as a major loss. The company, which pumped around £4.6bn ($7bn) into its offshore Arctic development, is now expected to take a hit of around $4.1bn as a consequence of this U-turn. Shareholders have been growing increasingly worried with the fruitlessness of this search and will not welcome the news that operations are now to be cancelled for the “foreseeable future”.
The company has also seen its reputation damaged by the criticism it has received as a result of these plans. The chief executive, Ben van Beurden, has expressed his concern that the company’s activities in the Arctic have considerably undermined his power to affect the ongoing discussions about climate change.
Arctic Oil “Too Expensive” To Use
His line, in recent times, has been to argue that Shell are attempting to focus on natural gas as a “transitional” energy source on the path to a future of lower carbon emissions. However there are many people who see this as an increasingly shaky argument, especially in light of the company’s Arctic endeavours. A number of energy industry experts have made the point that the potential oil reserves in the Arctic are too expensive to utilise, due to the low price of oil and a world that is moving towards making carbon emissions more expensive.
The director of Shell Upstream Americas, Marvin Odum, said in a statement today that:
“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. However, this is a clearly disappointing exploration outcome for this part of the basin.”
“Shell will now cease further exploration activity in offshore Alaska for the foreseeable future. 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.”
Greenpeace Celebrate Shell U-turn
The change in policy has been welcomed by John Sauven, the Greenpeace executive director in the UK, who said:
“Big oil has sustained an unmitigated defeat. They had a budget of billions, we had a movement of millions. For three years we faced them down, and the people won.
“The Save the Arctic movement has exacted a huge reputational price from Shell for its Arctic drilling programme. And as the company went another year without striking oil, that price finally became too high. They’re pulling out.
“Now President Obama should use his remaining months in office to say that no other oil company will be licenced to drill in the American Arctic.”