Shell, the Anglo-Dutch energy giant, says it is abandoning its work in the Alaskan Arctic because while it has found indications of oil and gas, “these are not sufficient to warrant further exploration.”
“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, director of Shell Upstream Americas, said in a statement. “However, this is a clearly disappointing exploration outcome for this part of the basin.”
Shell said it had drilled the Burger J well in the Chuchki Sea to a depth of 6,800 feet and the results mean the company “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 statement said.
The decision will cost Shell $4.1 billion. Bloomberg adds that Shell and other oil companies are restricting spending after the price of oil has fallen by about 50 percent as the market remains oversupplied with oil.
Shell’s decision to explore the Alaskan Arctic—and the Obama administration’s approval of the drilling—had been condemned by environmental groups.