Shell drops search for oil in Alaskan Arctic

Royal Dutch Shell made a $7 billion gamble and came up short. The oil giant has decided to indefinitely suspend offshore drilling in the Alaskan Arctic.

In a statement to investors, Shell said that they drilled down 6,800 feet, 150 miles from Barrow, Alaska and did find “indications of oil and gas” in the Burger J exploration well. However, they decided that it wasn’t enough to keep going.

“The Shell Alaska team has operated safely and exceptionally well in every aspect of this year's exploration program,” Marvin Odum, Director, Shell Upstream Americas, said in a statement. “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.”

So, Shell decided to stop exploration off the Alaska shore for the “foreseeable future,” based on the cost and lack of results from the Burger J well.

Shell valued the Alaskan operations at $3 billion, but Fortune notes that the company bet $7 billion in total on the risk. The company paid $2.1 billion for drilling rights in an area of the Chukchi Sea in 2008.

The company’s decision has already been hailed by environmentalists as a major victory and they hope it dissuades other companies from considering drilling in the Arctic.

“This is a victory for everyone who has stood up for the Arctic,” Greenpeace USA executive director Annie Leonard said. “Whether they took to kayaks or canoes, rappelled from bridges, or spread the news in their own communities, millions of people around the world have taken action against Arctic drilling. Today they have made history.”

Leonard also urged President Barack Obama to cancel all current plans to drill in the Arctic and to declare the area off limits to oil companies.

 

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