Climate organizations declared victory last week as Royal Dutch Shell abandoned its oil and gas development program in the Chukchi Sea, off the Alaska coast, for the “foreseeable future”.
“Shell has found indications of oil and gas in the Burger J well,” the company said in a statement, “but these are not sufficient to warrant further exploration.” After US$7 billion in costs and dramatic protests, the well will be capped.
The U.S. Bureau of Ocean Energy Management had calculated 75% odds of an oil spill greater than 1,000 barrels if a well in the Chukchi Sea went into commercial production.
“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.,” said Shell Upstream America Director Marvin Odum. “However, this is a clearly disappointing exploration outcome for this part of the basin.”
“Big oil has sustained an unmitigated defeat,” Greenpeace UK Executive Director John Sauven told Bloomberg in an email.
“That’s incredible. That’s huge,” Margaret Williams of Anchorage World Wildlife Fund’s told the Associated Press. “All along, the conservation community has been pointing to the challenging and unpredictable environmental conditions. We always thought the risk was tremendously great.”
The decision will cost Shell US$4.1 billion in future earnings. But “the company has already come under increasing pressure from shareholders worried about plunging oil prices, a planned merger with rival BG, as well as the costs of what has so far been a futile search in the Chukchi Sea,” The Guardian reported.
“It appears that Shell’s chief executive, Ben van Beurden, was also worried that the row over the Arctic was undermining his attempts to influence the debate around how to tackle climate change,” the paper noted. “His attempts to argue that a Shell strategy of building up gas as a ‘transitional’ fuel to pave the way to a lower-carbon future has met with skepticism, partly because of the Chukchi operations.”