Shell abandons Arctic drilling
BARROW, September 28, 2015 – Anglo-Dutch upstream giant Shell will cease all drilling operations in Alaska’s Arctic, the company reported on Monday, after poor results from an exploration well in the Chukchi Sea’s Burger prospect.
“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,” the company said in a press release.
The stakes were high for Shell. The company sunk about $4 billion into the drilling campaign – it holds a 100 percent working interest in 275 Outer Continental Shelf blocks in the Chukchi Sea, a basin the half the size of the Gulf of Mexico which remains mostly unexplored.
Geologists estimate that a full 13 percent of the world’s total oil and gas reserves are locked in the undersea Arctic, and the Burger prospect, about 241 kilometres from the city of Barrow, holds an estimated 4.3 billion barrels of oil equivalent alone.
“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 Upstream Americas director Marvin Odum said in the press release.