Shell walks from offshore Alaska

Published at Sep 29, 2015, in Features

Shell has announced that it will walk away from offshore Alaska not due to safety or environmental concerns, but because there simply wasn’t enough oil or gas in its exploration well to justify continuing.

In a statement, it said that although its drilling of the Burger J well in 150 feet of water was done safely, it did not hit enough to continue.

“Shell has found indications of oil and gas in the Burger J well,” it said “but these are not sufficient to warrant further exploration in the Burger Prospect.”

“Shell will now cease further exploration activity in offshore Alaska for the foreseeable future.”

The exploration program in the Chukchi Sea had been targeted by activists, who sought to halt drilling with several protest actions.

However, Shell said part of the decision was down to the regulatory risk of drilling in the region not matching up to the prospectivity of the well.

“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,” it said.

Shell upstream Americas director Marvin Odum said it was a frustrating result given the potential prize on offer.

Shell said the area was equivalent to half the size of the Gulf of Mexico but had only been lightly explored.

It now estimates it will take a $3 billion hit, the carrying value of the asset, as well as $1.1 billion in future contractual obligations.

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