Shell abandons controversial offshore Arctic drilling plan
ANCHORAGE, Alaska — Royal Dutch Shell has abandoned its long quest to become the first company to produce oil in Alaska’s Arctic waters, darkening the nation’s longterm oil prospects and delighting environmental groups that tried to block the project.
After years of effort, Shell is leaving the region “for the foreseeable future” because it failed to find enough oil to make further drilling worthwhile.
The company has spent more than $7 billion on the effort, slogged through a regulatory gantlet and fought environmental groups that feared a spill in the harsh climate would be difficult to clean up and devastating to polar bears, walruses, seals and other wildlife.
Shell persisted in hopes of finding a big new source of oil revenue and establishing expertise and a presence in the Arctic, which geologists estimate holds a quarter of the world’s undiscovered conventional oil and gas.
The drilling project also held the hopes of Alaska, which has seen oil production and revenues decline sharply in recent years, and the U.S. oil industry, which looked to Alaska’s offshore Arctic as the next source of oil big enough to keep the country among the top three oil producers in the world along with Saudi Arabia and Russia.
But Shell drilled to 6,800 feet about 80 miles from shore in the Chukchi Sea off Alaska’s northwest coast and just didn’t find much.
“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’s operations in the Americas, said in a statement issued late Sunday. “However, this is a clearly disappointing exploration outcome for this part of the basin.”
Known in the industry as turning up a “dry hole,” it’s common for exploratory drilling to find little to no oil, especially in formations that have not been explored much in the past. But Shell’s failure is notable because it was the only active drilling project in the sea, which Shell officials had called “a potential game-changer,” a vast untapped reservoir that could add to America’s energy supply for 50 years.
The Arctic’s vast oil and gas potential is exactly what worries scientists, who warn against tapping new sources of fossil fuels at a time when the world needs to drastically reduce emissions of carbon dioxide from fossil fuel consumption in order to prevent catastrophic changes to the earth’s climate.
Environmental groups, which had staged media campaigns aimed at tarnishing Shell’s reputation and tried unsuccessfully to block Arctic-bound vessels, reveled in Shell’s disappointment.
“Big oil has sustained an unmitigated defeat,” Greenpeace United Kingdom Executive Director John Sauven said.