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OIL AND GAS
Shell scraps controversial oil exploration in Alaska
by Staff Writers
London (AFP) Sept 28, 2015


Shell to dismantle offshore Alaska program
Anchorage, Alaska (UPI) Sep 28, 2015 - Royal Dutch Shell said a combination of weak market conditions and a lack of exploration success meant it was time to dismantle its offshore Alaska program.

Shell said it found evidence of oil and natural gas in its Burger exploration well located in the shallow waters off the coast of Alaska, but not enough to warrant further activity.

"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 United States," Marvin Odum, director of regional upstream operations for Shell, said in a statement. "However, this is a clearly disappointing exploration outcome for this part of the basin."

Shell said the area is roughly half the size of the Gulf of Mexico and remains largely unexplored.

The U.S. Bureau of Safety and Environmental Enforcement in August awarded Shell with one permit to start drilling an exploration well into oil-bearing zones in the Burger prospect in the arctic waters off the coast of Alaska.

A federal study of the Burger prospect from 2004 described it as likely the largest reserve pool of its kind off the Alaskan coast. Nevertheless, a company spokesman said the lack of exploration success, high costs and a challenging regulatory regime meant it was time to abandon the Alaska program for the foreseeable future.

"Operations will continue to safely demobilize people and equipment from the Chukchi Sea," the company said.

Shell's early efforts off the coast of Alaska were plagued by equipment issues. Shell in July discovered a small breach in the hull of MV Fennica, chartered to carry the safety equipment to the Chukchi Sea. A drill ship slated for offshore Alaska, Noble Discoverer, suffered a series of setbacks during a 2012 campaign off the coast of Alaska.

Susan Marry, deputy vice president for advocacy group Oceana, described Shell's ambitions in the arctic waters offshore Alaska as a "pipe dream."

The Dutch supermajor committed about $7 billion to the program. The company said the financial charges would be outlined in its third quarter 2015 results.

Anglo-Dutch energy giant Royal Dutch Shell said Monday it had scrapped its controversial offshore exploration in Alaska after failing to find sufficient quantities of oil and gas.

Shell announced that its Burger J well in the Chukchi Sea, off the northwest coast of Alaska, did not warrant further exploration, adding it would now stop its activities in Alaskan waters.

The energy major began drilling in July, two months after US President Barack Obama authorised Arctic oil drilling, a decision that infuriated environmental groups.

"Shell has found indications of oil and gas in the Burger J well, but these are not sufficient to warrant further exploration in the Burger prospect," the London-listed group said in a statement.

"The well will be sealed and abandoned in accordance with US regulations."

It added: "Shell 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."

In reaction to Obama's decision in May, Greenpeace denounced the US president and urged people to sign an online petition to block offshore Arctic drilling.

Justifying his move to allow Shell to drill in the area, Obama had described US oil production an "important" source of energy.

However, Greenpeace described oil drilling in the region as a "terrible mistake" that could damage the fragile Arctic environment and potentially spark an ecological disaster.

The pressure group had vowed to fight Shell and urged Obama to stop the firm's exploration activities in the region.

Shell said on Monday that Alaska was still of major importance for the United States, but added it was disappointed with its exploration results.

"The Shell Alaska team has operated safely and exceptionally well in every aspect of this year's exploration program," said Marvin Odum, director of Shell Upstream Americas.

"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 US.

"However, this is a clearly disappointing exploration outcome for this part of the basin."


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