Shell Stops Oil Exploration In Alaska | Independent Newspapers Limited
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Shell Stops Oil Exploration In Alaska

Posted: Sep 30, 2015 at 12:00 am   /   by   /   comments (0)

Shell took investors by surprise Monday with the announcement that it would cease exploration in offshore Alaska for the foreseeable future, following a string of “disappointing” results at key sites – namely the Chukchi Sea.

The development marks yet another setback for the company’s highly controversial arctic oil project, and figures show that the areas in question – the Chukchi and Beaufort Seas – have so far cost the company some $7 billion.

The decision to halt operations off the Alaskan coast reflects the company’s less-than-impressive results for the area, as well as the spiraling costs and regulatory complexities tied to it. “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, 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.”

The Anglo-Dutch oil giant expects to take a significant financial charge as a result of the findings, to be announced in the company’s forthcoming third quarter results. Shell’s own figures indicate that the balance sheet carrying value of its Alaska operations stands at $3bn, with another $1.1bn in outstanding contractual commitments.

Shell aside, Alaska’s administration will be disappointed to find that the company has failed to unearth much in the way of viable findings, as the country seeks to beef up its trans-Alaska pipeline, currently operating at less than 25 percent capacity.