Shell Stops Exploration Off Alaska for Foreseeable Future

Anglo-Dutch Royal Dutch Shell announced that it would stop exploration off the coast of 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’ reads a note released on Monday, referring to the Burger J exploration well drilled this summer in a basin that reportedly ‘demonstrates many of the key attributes of a major petroleum basin’.

The company, which holds a 100% working interest in 275 Outer Continental Shelf blocks in the Chukchi Sea, expects to take financial charges as a result of this announcement. 

‘The balance sheet carrying value of Shell's Alaska position is approximately $3.0 billion, with approximately a further $1.1 billion of future contractual commitments. An update will be provided with the third quarter 2015 results.’ 

The decision suggests that the current low-oil-price environment does not allow for risky, expensive projects. 

Environmentalists hailed the news, saying that the Shell’s decision is a “victory for the Arctic”.

“Shell has gambled big and lost big, both in terms of financial cost and its public reputation. This has become the most controversial oil project in the world, and despite its bluster Shell has been forced to walk away with nothing” Greenpeace International Executive Director Kumi Naidoo commented.  

Meanwhile, BG Group acquired three non-operated positions offshore Newfoundland from Spain’s Repsol. 

‘The blocks are located in the Atlantic Ocean, approximately 200 kilometres from St. John’s, Newfoundland. The company’s equity stakes range from 10% to 25%’ reads a note released by BG Group.