ANCHORAGE, Alaska (AP) — Royal Dutch Shell 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.
The announcement was 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 off shore
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 at the site.
“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 U.S.,” Marvin Odum, president of Shell USA, said in The Hague,
Netherlands. “However, this is a clearly disappointing exploration
outcome for this part of the basin.”
eable future,” the company said, because of the well results and because
of the “challenging and unpredictable federal regulatory environment in
offshore Alaska.
Margaret Williams of the World Wildlife Fund in Anchorage, called the
news stunning.
“That’s incredible. That’s huge,” she said. “All along the conservation
community has been pointing to the challenging and unpredictable
environmental conditions. We always thought the risk was tremendously
great.”
Environmental groups said oil exploration in the ecologically fragile
Arctic could lead to increased greenhouse gases, crude oil spills and a
disaster for polar bears, walrus and ice seals. Production rigs
extracting oil would be subject to punishing storms, shifting ice and
months of operating in the cold and dark. Over the summer, protesters in
kayaks unsuccessfully tried to block Arctic-bound Shell vessels in
Seattle and Portland, Oregon.
“Polar bears, Alaska’s Arctic and our climate just caught a huge break,”
said Miyoko Sakashita, oceans program director for the Center for
Biological Diversity, in a statement. “Here’s hoping Shell leaves the
Arctic forever.”
Monday was Shell’s final day to drill this year in petroleum-bearing rock
under its federal permit. Regulators required Shell to stop a month
before sea ice is expected to re-form in the lease area.
The U.S. Geological Survey estimates U.S. Arctic waters in the Chukchi
and Beaufort seas contain 26 billion barrels or more of recoverable oil
in total. Shell officials had called the Chukchi basin “a potential
game-changer,” a vast untapped reservoir that could add to America’s
energy supply for 50 years.
Shell had planned at least one more year of exploration with up to six
wells drilled.
A transition to production could have taken a decade or longer.
Shell had the strong backing of Alaska officials and business leaders who
want a new source of crude oil filling the trans-Alaska pipeline, now
running at less than one-quarter capacity.
Charles Ebinger, senior fellow for the Brookings Institution Energy
Security and Climate Initiative, said in an interview that a successful
well by Shell would have been “a terribly big deal,” opening an area that
U.S. officials say contains 15 billion barrels of oil.
While oil prices have dropped significantly in recent years and nations
have pushed for cleaner energy sources, analysts predict that the world
between 2030 and 2040 will need another 10 million barrels a day to meet
growing demand, especially in developing countries, Ebinger said.
 

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