Shell could abandon Arctic after this season

Not much point in negotiating for a lease extension now. Obama set them up for failure with too many silly regulations — you must have two rigs on scene, but only one can drill at a time to protect the walruses 100 miles away.

Nor do they want to make Arctic drilling more of an issue in the Presidential campaign.

[QUOTE=tugsailor;169583]Not much point in negotiating for a lease extension now. Obama set them up for failure with too many silly regulations — you must have two rigs on scene, but only one can drill at a time to protect the walruses 100 miles away.

Nor do they want to make Arctic drilling more of an issue in the Presidential campaign.[/QUOTE]

but to extend the leases leaves the door open to return someday when oil prices are much higher than now and perhaps there is a different regulatory climate in Washingtoon. What Shell needs to be able to drill multiple wells in one season would be a single standby rig and three active. Who knows…if Shell had both KULLUK and POLAR PIONEER this season with the DISCO as standby they might have scored big and everything would be different than it is today.

In the end, it was the low price that killed the Arctic for now…plain and simple, it was not the dry hole, the goobermint or Xena. The only thing that could have made shareholders go along with staying the course in the Chukchi would have been a massive find and even then it would only be appraisal wells to delineate the size of the field. No way in hell that until oil got to over $150/bbl for more than just a few years that anyone would have even begun to contemplate greenlighting the move to production in such an expensive place to work and produce energy. Arctic energy is looking more and more like the end of this century when all of us here are long dead and gone but someday we will need that oil. I had just wished I was going to see it in my lifetime…had alot riding on that prospect and all now written off as a loss.

this morning NPR had some insightful coverage on Shell’s decision herein case anyone wants to listen to it

they also spoke about the impact on the State of Alaska here

as I sit here tonight continuing to read all that I can from the world press about Shell’s decision, I cannot help but marvel at what an incredible odyssey this has been for all of us since 2008. How we watched what many thought was going to be the single biggest discovery in energy on the North American continent since Prudhoe Bay became one of the biggest energy exploration debacles in any of our lifetimes. Only now is the magnitude of all of this sinking in and it leaves one with a very sinking sensation. How in 2015, with all the management and engineering tools could something thought so promising be so utterly devoid of any practical value? All of that effort…for nothing!

Truly astounding when you contemplate it all…

[QUOTE=c.captain;169635]How in 2015, with all the management and engineering tools could something thought so promising be so utterly devoid of any practical value? [/QUOTE]

It wasn’t like we could not see it coming. The entire history of Shell’s presence in the area is riddled with examples of incompetence and mismanagment. The selection of cnotractors and lack of oversight and planning cost them dearly and threatened to cost even more. The corporate policy of employing gold braided but incompetent and supposedly well connected former regulators and CG administrative types reflects an internal culture that could lead to nothing better than what we have seen. Whether the end result came from stupidity, ignorance, incompetence, or just plain old fashioned arrogance is hard to say but all those components are part of the story.

Their performance at every stage was finally seen by someone in a position to pull the plug as evidence they were in way over their head.

Indeed Steamer…the levels of utter hubris Shell displayed are simply off the charts (at least as far as the non banking sector goes). When has such a major corporation performed so badly for so many years…ok BP might be used as an example, but theirs was a different form of trainwreck imo. With Shell we have all watched as they made misstep after misstep throughout this debacle and wonder how such a huge organization like Shell not realize themselves their own haplessness. Then they went to dig their own grave by an attitude that they were just certain there was a massive field of global proportions so when the dry hole came in, it left one feeling nothing other than speechless…I still feel a huge disappointed emptiness now at the news. That a huge gift I was told was coming wasn’t afterall…I want to smite the giver but seeing he is such a fool think to myself “why even bother”? They are just fools anyway…

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all in all a sad and surreal story, indeed.

Thought I somehow keep wondering whether Shell will strategically re-assess some options and silently look towards the Russian Arctic. Remember they still have some cooperation or MOU with Gazprom for some of their Arctic offshore leases.

Of course, as long as those sanctions are in place they can’t even sell them a single drill bit (so to speak).

[QUOTE=c.captain;169635]as I sit here tonight continuing to read all that I can from the world press about Shell’s decision, I cannot help but marvel at what an incredible odyssey this has been for all of us since 2008. How we watched what many thought was going to be the single biggest discovery in energy on the North American continent since Prudhoe Bay became one of the biggest energy exploration debacles in any of our lifetimes. Only now is the magnitude of all of this sinking in and it leaves one with a very sinking sensation. How in 2015, with all the management and engineering tools could something thought so promising be so utterly devoid of any practical value? All of that effort…for nothing!

Truly astounding when you contemplate it all…[/QUOTE]
Just imagine where the price of oil would go if they did announce the worlds biggest discovery in shallow water???

[QUOTE=powerabout;169662]Just imagine where the price of oil would go if they did announce the worlds biggest discovery in shallow water???[/QUOTE]

You know, I do not believe the price would change a whole lot because any of that crude would be decades away from being produced however it might have been a huge boost to Shell’s share price even though technically those fields could not be added to Shell’s assets since the oil could not be produced at the current prices without a huge loss.

What I do believe would have occurred is a new massive interest by everyone else in the Arctic and other plans to be looked at again. Once oil is known to exist in huge quantities in a location albeit a very difficult location, others will want a part of it so we might have other majors like Conoco-Phillips and Statoil to at least start talking again about exploring their leases in the Arctic. Of course, the entire Alaskan Arctic is now considered as a place no one would ever think about going to now with Shell’s announcement so possibly tens of thousands of jobs vaporized on Monday with the announcement that Shell is done. I consider to have personally lost much…I had huge hopes to be part of a big show making big money before I retire. All up in smoke now…

This could all be smoke and mirrors to deter others from breaking ground up there. A dry hole in this market means everyone else is even more bearish than they already were. Now Shell can sit back and wait for the price to come back up and go back in and restart. Everyone else will be playing catch up. Maybe they modify the Aviq to be a seismic vessel and take the new info from these wells and work out from there. They got to much money involved at this point to totally walk away. They take a step back then discreetly ease back in while no one is paying attention.

[QUOTE=Fraqrat;169665]This could all be smoke and mirrors to deter others from breaking ground up there. A dry hole in this market means everyone else is even more bearish than they already were. Now Shell can sit back and wait for the price to come back up and go back in and restart. Everyone else will be playing catch up. Maybe they modify the Aviq to be a seismic vessel and take the new info from these wells and work out from there. They got to much money involved at this point to totally walk away. They take a step back then discreetly ease back in while no one is paying attention.[/QUOTE]

you know that very thought did occur to me that Burger J actually came back with very promising signs but that Shell wanted to keep that under their hat, however it doesn’t scour since now Shell is going to be forced to take that massive writedown on their assets which they would not have to do if they wanted to keep their options open for the future in the Chukchi. If there had been enough of a play remaining then they could have announced that there was promising signs but with the current price of crude they would not continue exploration until there was a price recovery. That way, they could keep all the restless shareholders happy with ending the appalling spending in Alaska but remain open to start again in the future when circumstances improve? This move literally cuts their own dick right off at the balls and leave them utterly unable to perform anything at all!

The way that Shell has handled this with the words they have used seems to me that they have been bludgeoned heavily (mostly by their own hand) and when the well came in dry as it did that literally they turned ice cold (my pun) to any further though to go back until after possibly decades have passed and the wounds they have suffered have healed. It truly is as if there is no desire by Shell whatsoever to keep trying now and that is what seems so astonishing to me. To have invested so much and then just shut it down and burn the pile to ashes like they are preparing to do…for what purpose? Do they truly believe suddenly the Chukchi Sea is a barren wasteland after so many years of telling us it was the next great frontier? This suddenly turn about is staggering to me!

I am doubly pissed at Shell…first for being an incompetent clown circus but second, after finally getting the show off the ground after years of trial, cutting and running away like a scared bunny the first sign of not striking it big! PHUCKING PHOOLS all of em!

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[QUOTE=c.captain;169666]. It truly is as there is no desires whatsoever to keep trying now and that is what seems so astonishing to me. To have invested so much and then just shut it down and burn the pile to ashes like they are preparing to do…for what purpose?[/QUOTE]

There is no connection between how much money, so called sunk costs, has been spent in the past and the decision to continue to spend money in the future. [I]Sunk cost fallacy[/I], aka throwing good money after bad.

The only way Arctic Alaska oil exploration is going to happen again is with very strong Government commitment to success and active support. This will require a pro-business, pro-energy security Republican Administration to be in place for a number of years.

We should move ahead with building a fleet of new icebreakers that are also capable of doing the most advanced 3D seismic surveys. We should do a thorough survey of the Arctic Alaska shelf and nearby Deepwater, and publish that data. We should build an Arctic port at Point Hope and a sub-Arctic port at Port Clarence that will be ready to support oil drilling next time. The Government should retain a 12 percent royalty interest but award the leases for free to oil companies with state of the art equipment and exploration plans that are ready to drill. The next time drilling begins, there should be a minimum of five oil companies drilling with at least 10 rigs to reach critical mass and find oil the first season.

There should be no more stupid whales and walrus “protection” rules, or other intentional obstacles. If whales are scared off (very doubtful) so that Natives cannot hunt and kill them, that’s a good thing. Same with the walruses. Our Arctic drilling rules should be at least as stringent as Norway’s, but any additional rules should be subjected to a serious cost benefit analysis before adoption.

We need to show that we are open for business and an active partner with a stake in a successful outcome, or no one should ever drill in the Arctic again.

[QUOTE=tugsailor;169668]We need to show that we are open for business and an active partner with a stake in a successful outcome, or no one should ever drill in the Arctic again.[/QUOTE]

DAMNED GOOD IDEA! A state owned oil company like Statoil that then invests its a large percentage of the profits earned in the populace of the nation instead of the select group of shareholders. Further still, one which mandates that all workers in the state enterprise be represented by collective bargaining. Sign me up for some of that…socialized industry with profits to the people!

Not a good idea - you’ll just end up with a bad survey vessel and an icebreaker with marginally less capability for its primary role. Just do what others do: take a normal (ice-strengthened) survey vessel and provide an icebreaker to carry out ice management in front.

Geco Snapper, err… Snapper now I guess, is an icebreaker hulled anchor handler that was converted to a seismic boat… and previously did seismic work in the Arctic as well. It would need some upgrades but otherwise would fit the bill.

[QUOTE=c.captain;169663]You know, I do not believe the price would change a whole lot because any of that crude would be decades away from being produced however it might have been a huge boost to Shell’s share price even though technically those fields could not be added to Shell’s assets since the oil could not be produced at the current prices without a huge loss.

What I do believe would have occurred is a new massive interest by everyone else in the Arctic and other plans to be looked at again. Once oil is known to exist in huge quantities in a location albeit a very difficult location, others will want a part of it so we might have other majors like Conoco-Phillips and Statoil to at least start talking again about exploring their leases in the Arctic. Of course, the entire Alaskan Arctic is now considered as a place no one would ever think about going to now with Shell’s announcement so possibly tens of thousands of jobs vaporized on Monday with the announcement that Shell is done. I consider to have personally lost much…I had huge hopes to be part of a big show making big money before I retire. All up in smoke now…[/QUOTE]
share price is based on reserves
but yes I would also like another few boom years but I cant see anybodies economy taking off to create a demand for all the oil we have now

[QUOTE=powerabout;169684]share price is based on reserves
but yes I would also like another few boom years but I cant see anybodies economy taking off to create a demand for all the oil we have now[/QUOTE]

I am seriously trying to think what motivated Shell to make such a drastic burn all the bridges move with their announcement? I am no accountant and wonder what do they earn from taking the massive writedown of assets? It is going to hammer their stock hard and I wonder if they could instead have said that under the current market, that Shell could not afford the spending to continue searching but after a price recovery they would return? I guess there is a good reason for burning the pile to ashes but it surprises the hell out of me!

Perhaps the frequency of the drill bit in the earths crust is disrupting the harmonics of the HAARP. The government may have ordered them to shut it down.

gotta be it…how can you doubt such a report when you see the creds of the author?

About the Author

Christina Sarich is a musician, yogi, humanitarian and freelance writer who channels many hours of studying Lao Tzu, Paramahansa Yogananda, Rob Brezny, Miles Davis, and Tom Robbins into interesting tidbits to help you Wake up Your Sleepy Little Head, and See the Big Picture. Her blog is Yoga for the New World. Her latest book is Pharma Sutra: Healing the Body And Mind Through the Art of Yoga.

This is of course a coverstory for a person who obviously is 2015’s Doctor Strangelove…J. Frank Parnell!

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