Shell could abandon Arctic after this season

I don’t think the Aiviq is what the USCG is looking for. In worst case, purchasing such vessel as a stopgap measure could push the acquisition of a new polar class icebreaker even further into the future. Instead of just a few years, there could be a decade when the most capable icebreaker in the USCG’s arsenal would be the medium icebreaker Healy, followed by the Great Lakes buoy tender Mackinaw…

[QUOTE=tugsailor;169329][B]The current price of oil has little to with future production that probably would not start for at least 10 years. “Ever” is a long long time and beyond predictability. [/B]

Shell should not have gone north in 2012 without the very biggest and best new Arctic ready rigs, and oil spill containment and clean up equipment, with all the bugs worked out. Shell should not have foolishly encouraged and allowed Chouest to put KULLUK on the rocks.

Obama was determined to prevent Arctic drilling through cost prohibitive and time wasting restrictions rather than an outright ban.

It makes no sense for any company to try to drill for oil in the US Arctic unless the government is fully supportive.

In 20 or 30 years when oil is over $300 a barrel, gasoline is being rationed, and most of the Eco-freaks have frozen to death and in the dark, there will be a new government supported effort to develop Arctic oil.[/QUOTE]
then why have they all stopped exploratory drilling even when they can get any vessel for 50% less than yesterdays rate?
Looks like short termism to me

Obviously, current cash flow available for capex limits current prospective drilling. That doe not mean that Arctic drilling is now off the table for"ever." Nor does it mean that a company the size of Shell could not continue with a relatively small Arctic drilling program if it is proving massive new reserves.

The biggest problem is that Shell has apparently not found enough oil to justify any sort of announcement.

The second biggest problem is that the current administration is hostile, uncooperative, and attempting to force Shell (and every other oil company) to give up on the Arctic forever. Obama wants to be able to announce the end of Arctic drilling because it will never be cost effective, in addition to not being worth the environmental risk.

If the government wanted Arctic drilling, it would commission 3D seismic surveys and publish the data. It would encourage and support drilling by enough oil companies to really explore the area once the price of oil rises.

At this point we do NOT know if Shell is actually getting ready to abandon the Arctic, or if that was just inaccurately reported or hypothetical loose talk.

[QUOTE=tugsailor;169394]At this point we do NOT know if Shell is actually getting ready to abandon the Arctic, or if that was just inaccurately reported or hypothetical loose talk.[/QUOTE]

inaccurate? these were words directly out of the mouth of the CEO of Royal Dutch Shell

Everything supposedly said (no, I don’t trust the press to get the story straight, not even the BBC) by the Shell CEO is obvious:

We are looking for oil in the Chukchi. If we don’t find any oil, we will probably give up.

All that seems pretty obvious. Any of us could have predicted that several years ago.

[QUOTE=tugsailor;169408]Everything supposedly said (no, I don’t trust the press to get the story straight, not even the BBC) by the Shell CEO is obvious:

We are looking for oil in the Chukchi. If we don’t find any oil, we will probably give up.

All that seems pretty obvious. Any of us could have predicted that several years ago.[/QUOTE]

which seems to me that Shell is setting the stage to pull out soon hence why the comments of doubt. If Shell was going to maintain their steadfast commitment to the Arctic, the interview with the BBC would have not included such statements. Shell realizes that they are spending far too much on their adventures in the north for energy which cannot be produced economically for at least 20 years. I would expect such statements to be made to let shareholders know that Shell does possess spending disciple and knows that with $45/bbl crude cannot justify a billion a year even if the Arctic might hold incredible resources. If you can’t produce what you find profitably, then you have no business spending so much trying to find it plus there is the political benefits to be gained to show all the opposition that you aren’t hell bent to keep going regardless.

let me just qualify my statement above by saying that Shell can now pull back because they have satisfied the terms of their lease of the blocks…any oil up there in the Chukchi is going to be theirs first to produce in the next 20years. It may not be able to be put on their books are proven reserves but once the price of oil recovers enough they will be able to add it to their assets. Those leases have the potential to be worth hundreds of billions someday and Shell had to pay now to be able to collect later but how much later is the biggest question of all? At least two decades and maybe more.

[B]Shell to Cease Off-Shore Arctic Oil Drilling in Alaska[/B]

Royal Dutch Shell PLC says it’s ceasing exploration in offshore Alaska for the foreseeable future.

The company says an exploratory well drilled to 6,800 feet found oil and gas but not in sufficient quantities.

Shell USA President Marvin Odum says in an announcement early Monday in The Netherlands that it’s a disappointing outcome for that part of the Chukchi Sea basin.

Shell drilled in 150 feet of water about 80 miles off Alaska’s northwest coast.

The exploratory well was the first in the Chukchi in 24 years.

Environmental groups oppose Arctic offshore drilling and say industrial activity and more greenhouse gases will harm polar bears, walrus and ice seals.

Over the summer, protesters in kayaks unsuccessfully tried to block Arctic-bound Shell vessels in Seattle and Portland, Oregon.

Shell has spent about $7 billion on Arctic offshore development on the hope that there would be deposits worth pursuing.

guess this thread can be closed now! Though only after champagne from c.captain.

Here’s the official announcement from Shell:

http://www.shell.us/about-us/projects-and-locations/shell-in-alaska/shell-in-alaska-news-and-media-releases/2015-media-releases/shell-updates-on-alaska-exploration.html

[B]Shell Updates On Alaska Exploration[/B]

Shell today provides an update on the Burger J exploration well, located in Alaska’s Chukchi Sea. The Burger J well is approximately 150 miles from Barrow, Alaska, in about 150 feet of water. Shell safely drilled the well to a total depth of 6800 feet this summer in a basin that demonstrates many of the key attributes of a major petroleum basin. For an area equivalent to half the size of the Gulf of Mexico, this basin remains substantially under-explored.

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 well will be sealed and abandoned in accordance with U.S. regulations.

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

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.

The company expects to take financial charges as a result of this announcement. The balance sheet carrying value of Shell’s Alaska position is approximately $3.0 billion, with approximately a further $1.1 billion of future contractual commitments. An update will be provided with the third quarter 2015 results.

Shell holds a 100% working interest in 275 Outer Continental Shelf blocks in the Chukchi Sea.

Operations will continue to safely de-mobilize people and equipment from the Chukchi Sea.

I wonder what ECO is going to do with Aiviq and the two icebreakers currently under construction?

[QUOTE=Drill Bill;169510]guess this thread can be closed now! Though only after champagne from c.captain.[/QUOTE]

although I am not surprised at Shell’s decision with the release of this news, I am actually quite disappointed and saddened…THIS NEWS SUCKS!

there will be no celebrations here…

[QUOTE=Tups;169511]

I wonder what ECO is going to do with Aiviq and the two icebreakers currently under construction?[/QUOTE]

maybe store them somewhere safely and dust them off every 3 months. They may still have a purpose one day.

Not so for the Discoverer, I’m afraid. That one may follow the Kulluk, straight to the Chinese scrapyard.

[QUOTE=Tups;169511]I wonder what ECO is going to do with Aiviq and the two icebreakers currently under construction?[/QUOTE]

the two being built will not be finished, but I have absolutely no clue as to AIVIQ’s future. She will sit at a dock for many, many years to come.

Didnt Shell fully pay for it anyway? Maybe ECO will buy for pennies on the dollar.

[QUOTE=Drill Bill;169524]maybe store them somewhere safely and dust them off every 3 months. They may still have a purpose one day.

Not so for the Discoverer, I’m afraid. That one may follow the Kulluk, straight to the Chinese scrapyard.[/QUOTE]

That could happen. After all, Kulluk spent twelve years mothballed somewhere in the Canadian Arctic before Shell acquired it and, as far as I know, SSDC is still stacked up somewhere. Without the sanctions, Aiviq could find work somewhere in Russia, but then again I’m not sure if she would be competitive against more modern Russian offshore vessels in more challenging ice conditions.

As for Frankenstein, didn’t Noble install a new main engine and some other upgrades before this season? Perhaps she could find work in some niche market where you can’t use DP.

[QUOTE=commtuna;169528]Didnt Shell fully pay for it anyway? Maybe ECO will buy for pennies on the dollar.[/QUOTE]

I don’t believe that is the way Massa Gary structures his deals? I always thought he built against a long term charter agreement which is how he makes his profits with a newbuilding since he doesn’t build for anyone but himself and I can’t imagine any charter with Shell for a vessel as expensive to build the AIVIQ would be anything less than 10 years…likely longer. Shell however might buy out the AIVIQ charter agreement outright from ECO if it will save them money but Gary won’t take the offer if he doesn’t have a use for the ship which none of us can see. Convert it to a massive subsea ship will cost another $100M and the world is already well supplied with big subsea vessels including many owned already by Chouest. Shell is simply stuck now and it is their own damned fault for not having a true multipurpose vessel built for their use.

Now regarding Shell’s Arctic ambitions, I do not believe that Shell is gone forever from the north. They have satisfied the requirement that they drill their lease and have it in their pocket for the future. I am surprised that they only got one well drilled to the payzone this season and more surprised it was not a big score as I thought all the shallow seismic data would have given them a very good picture of where to drill. There is no reason to downplay the results so it must have been a poor find however, those of us who know the territory don’t believe the Chukchi is barren. There is oil there and in massive quantities but with crude at $45/bbl, Shell can’t justify to their shareholders to keep chasing that massive find spending more than a billion a year since whatever is found can’t be put on the books until the price of oil gets close to $200/bbl. Someday, when there is a big price recovery, Shell may dust off their ambitions and go back but I believe they are now done for the next decade. Nobody gonna be back until well after 2025 and maybe longer. As long as crude can be found in sufficient quantities to supply world demand from lower cost provinces, Shell will not be returning. It is the simple economics of oil.

.

[QUOTE=Tups;169531]As for Frankenstein, didn’t Noble install a new main engine and some other upgrades before this season? Perhaps she could find work in some niche market where you can’t use DP.[/QUOTE]

Because Shell has spent so much on the DISCO over the past decade, I would imagine they will try to keep her working but I believe the vessel will end up warm stacked in Singapore within a year and scrapped within three if the price of crude does not recover.

Lots of unwinding to do know with all the agreements Shell made with companies like Foss but the big ones to unwind are for the DISCO and the AIVIQ.

a short while ago, the BBC posted this op/ed on Shell’s decision…

[B]Shell has made a costly call to abandon Alaska[/B]

Kamal Ahmed Business editor

It could have been Hillary Clinton’s tweet that did it.

Just after the US government had given the go-ahead for Shell to restart its exploration in Alaska, the Democratic presidential candidate took to the social media site.

“The Arctic is a unique treasure,” Mrs Clinton said on Twitter. “Given what we know now, it’s not worth the risk of drilling.”

Which seemed to ignore the fact that drilling has been taking place in the Arctic for decades - for example oil was first discovered in one of the main basins, Prudhoe Bay, in 1968.

The area is still producing around 250,000 barrels per day and is one of America’s largest producing fields.

Shell knows that its every move in the Arctic is scrutinised commercially, politically and environmentally.

Quite rightly, of course, when it comes to exploration in one of the most environmentally sensitive areas in the world.
Surprise move

Shell’s original position on the Arctic was that exploration of the vast area - much of it untapped - was important.

The oil major argued that demand for fossil fuels was increasing as the world developed, exploration had to continue despite the low oil price and that the Arctic had long been a source of oil and gas.

This morning’s announcement that Shell was pulling out of the Chukchi Sea therefore comes as a surprise.

Particularly given it will cost Shell £2.6bn to execute the withdrawal.

And that the company has already spent the thick end of £5bn getting to this point.

Earlier this year, I interviewed Shell’s chief executive Ben van Beurden - and he was certainly bullish on Alaska.

“The potential in the Arctic is very, very significant,” he told me, saying that “the Arctic probably holds the largest yet to be discovered resource base”.

Shell’s investors were regular recipients of long and detailed presentations on the potential for the region.

So, what changed?

Certainly, the first findings from the Burger J exploration well 150 miles off the Alaskan coast were not promising.

Second, although President Barack Obama had given the necessary permissions for drilling to start again following the problems of rig fires in 2012, Mrs Clinton’s tweet revealed that political risks were still substantial.

Mr van Beurden also has plenty of other issues weighing on his in-tray.

Not least the £55bn takeover of BG Group.

And the halving on the oil price over the past 18 months which has led to a rapid reduction in capital expenditure for all the oil majors.

Share prices have been under pressure, with Shell’s dropping over 30% in the last 12 months.

Given that background, the Arctic appears to be one major project too far, for Shell’s management as well as investors.

And, frankly, there are easier places to explore for oil and gas, technically and politically.
‘High risk’

That was very much the opinion of Lord Browne, the former chief executive of BP who is now chairman of the oil and gas business, L1 Energy.

I spoke to him this morning.

“The Arctic is a very high risk place to explore, and even if you find something, a very expensive place to develop in,” he told me.

"The last very big field is Prudhoe Bay, and it’s been a very difficult place to find oil and gas.

“There’ll be better places, more easy places, to go and explore.”

But, with demand for fossil fuels expected to rise over the next decade as emerging market growth continues, Lord Browne says exploration in the area off Alaska could return.

“We should always keep an eye on it, just in case.”

      • Updated - - -

here is the Houston Chronicle’s report

[B]Shell abandons Arctic oil quest after $7 billion bid yields ‘disappointing’ results[/B]

Posted on September 28, 2015 | By Jennifer A. Dlouhy

WASHINGTON — Royal Dutch Shell on Monday said it was abandoning a $7 billion, seven-year quest for crude under Arctic waters, after an exploratory well failed to find significant amounts of oil and gas.

Shell’s exploratory oil well in the Chukchi Sea north of Alaska encountered “indications of oil and gas” but the company said they were “not sufficient to warrant further exploration” — a significant blow for the Anglo-Dutch firm that had hoped to find a multibillion barrel crude reservoir in those remote waters.

“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 Marvin Odum, the Houston-based director of Shell Upstream Americas. “However, this is a clearly disappointing exploration outcome for this part of the basin.”

Shell said in a statement that it would cease further exploration activity off the coast of 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,” the company said.

Shell also will take a financial charge from the decision, since the firm’s Alaska assets have a carrying value of about $3 billion and the company still has an additional $1.1 billion already committed in existing contracts for rigs, ships and other assets. Shell could pare its potential $4.1 billion write down by putting some of those contracted vessels to work elsewhere or subcontracting them to others.

The full extent of the financial damage will be described on Oct. 29, when Shell announces its third-quarter earnings. But the blow could be especially significant when cast against falling earnings. Shell’s second quarter profit was $3.8 billion, compared with $6.1 billion for the same period last year. First quarter earnings were $3.2 billion, down from $7.3 billion in the first quarter of 2014.

Shell was pursuing a major Arctic oil discovery after spending a record-setting $2.1 billion to buy 275 Chukchi Sea oil and gas leases in a 2008 government auction.

Because of the costs of extracting oil and building the infrastructure to deliver it to market, Shell CEO Ben van Beurden bluntly warned earlier this year that the economics of Shell’s Arctic project would only work “if the structures are full of oil.”

An oil discovery that would be viewed as commercially viable in other basins, such as a 1 billion barrel find in the Gulf of Mexico, wouldn’t pay off in the Arctic right now, noted Dave Pursell, head of securities at Houston-based energy investment bank Tudor, Pickering, Holt & Co.

“The challenge for this was given the remote nature and the expense it was going to have to be a massive accumulation to make it work,” Pursell said. For Shell, “this was an awfully big swing, and they didn’t even make contact.”

Shares in Shell’s A shares tumbled $1.08 in early trading Monday, down 2.28 percent on the news. Shell’s B shares dropped 2.3 percent. But analysts said the overwhelming sentiment from investors would be relief that the company pulled the plug now, rather than after spending billions more pursuing the project. Even with a significant discovery, there would be “considerable skepticism that it would be commercial in a lower-for-longer oil price scenario,” Tudor Pickering Holt & Co. said in a research note.

The company’s declaration is likely to chill oil industry investment in the region, illustrating anew that despite the tremendous promise of crude and gas locked under Arctic waters, the financial and environmental risks of getting it may be too high. Other oil companies, including Statoil and ConocoPhillips, have leases in U.S. Arctic waters but have delayed their own exploratory bids, citing regulatory uncertainty.

Shell’s defeat also underscores the inherent risks of oil exploration, whether in icy seas north of Alaska or the temperate waters of the Gulf. In the deep-water Miocene play, where much Gulf activity is concentrated these days, just one in five recently drilled wells has been a success. Another top target, the Eastern Gulf Norphlet, has a success rate of just 17 percent.

The episode recalls the long-abandoned Mukluk well in the Beaufort Sea, just a few hundred miles from Shell’s Burger prospect. A consortium of companies spent nearly $1 billion on the well in the 1980s because they were convinced it was loaded with crude. But their only discovery, in December 1983, was salt water and traces of long-gone oil.

Analysts noted that Shell is the sole owner of the Chukchi Sea leases that make up Burger, a position that limited the company’s outside advice on the prospect. Shell did not have other partners asking potentially tough “what if” questions about the prospectivity of the site and the location of the firm’s planned wells.

“One of the reasons you have partners is to gut-check your enthusiasm, and anytime somebody does something 100 percent, the risk is they believe their own story too much,” TPH’s Pursell said.

Shell drilled into the same prospect in 1989 and 1990 and found gas, but this time, the company was aiming for oil. Executives knew that with the high cost of constructing production facilities and pipelines in this frontier region, it would not be economically viable to develop a prospect that contained merely low-priced gas, without billions of barrels of more lucrative crude.

Shell’s executive vice president for the Arctic, Ann Pickard, bluntly warned about the risks in May. “If we find more gas, it’s before its time,” she said in an interview. “It might be worthwhile some point in the future, but it’s before it’s time. We really do need to get out and prove there is some oil there.”

Pickard also cast Shell’s Burger J well as a critical test of the company’s Burger prospect. “If we get a dry hole in J, we’re done,” the Houston-based executive said at the time. “I’ll recommend we say goodbye.”

Even within Shell, some executives were skeptical of the company’s Arctic commitment. Van Beurden openly questioned the project after he became chief executive last year. But Pickard and others helped persuade him to stick by the program, even as falling crude prices forced Shell to slash other capital expenditures.

In July, van Beurden boasted that the company’s Chukchi Sea prospects could rival even “the largest prospects” in the Gulf of Mexico. Although a single well probably wouldn’t be enough to appraise the site, van Beurden said at the time that “very disappointing” results could “condemn the prospect.”

Shell started drilling its Burger J well on July 30, beginning by excavating a special “mud-line cellar” to hold emergency equipment below the reach of floating icebergs. The company was forced to briefly halt drilling in late August, amid gale-force winds and 11-foot seas.

Company officials have described the well itself as relatively straightforward — sited in shallow, 140-foot waters about 70 miles from Alaska’s northwest coastline. Using the Transocean Polar Pioneer rig, Shell drilled the well to a total depth of 6,800 feet.

A second rig, the Noble Discoverer, was barred from simultaneously boring a second well about 9 miles away because of federal walrus protections that required a 15-mile buffer zone.

Three years ago, Shell partially drilled a separate well in its Burger prospect. That 2012 effort was marred by mishaps, including a drifting drillship, air pollution permit violations and the grounding of the company’s contracted Kulluk drilling unit during a botched tow to Seattle.

The Arctic is a challenging place for oil exploration, with 20-foot seas, ice, freezing temperatures and storms that can produce hurricane-force winds. Conservationists argue that any misstep in the remote region about 1,000 miles from the nearest deep-water port could irrevocably damage the fragile Arctic ecosystem, jeopardizing walruses and whales that migrate through the area.

Environmentalists opposed to Arctic drilling also feared the activity could exacerbate climate change by unlocking significant new oil reserves.

“Drilling for oil there is inherently dangerous and will only drive the world deeper into the climate crisis,” Miyoko Sakashita, oceans program director for the Center for Biological Diversity, said in a statement. “If we’re going to leave behind a livable planet, we need to leave that oil in the ground today, tomorrow and always.”

“Polar bears, Alaska’s Arctic and our climate just caught a huge break,” Sakashita added.

Niel Lawrence, the Alaska director for the Natural Resources Defense Council, said Shell’s announcement is “a watershed moment for the climate, the company’s investors, the fragile region and its iconic wildlife, and American consumers.

“For the climate, Shell won’t be locking in fossil fuel production we don’t need and can’t afford if we want to limit global warming,” Lawrence said. “Shell’s shareholders won’t be on the hook for billions more investment that any rational climate agreement would leave stranded.”

Analysts said Shell’s results will further discourage other companies from exploring for oil and gas in U.S. Arctic waters.

There already were signs of tepid interest. When the federal government invited the oil industry to detail what parts of the Chukchi and Beaufort seas should be available for leasing during separate 2016 and 2017 auctions, companies largely ignored the request for information. Firms objected to the Interior Department’s decision to limit available Chukchi and Beaufort Sea acreage to areas with fewer environmental risks, with tracts nominated by would-be bidders.

Although the Bureau of Ocean Energy Management has not announced plans to delay or cancel either auction, previous offshore oil sales have been postponed amid low industry appetite.

Lois Epstein, the director of The Wilderness Society’s Arctic Program, said Shell’s announcement should deter other companies.

“Hopefully, this means that we are done with oil companies gambling with the Arctic Ocean, and we can celebrate the news that the Arctic Ocean will be safe for the foreseeable future,” Epstein said.

The oil industry views the Arctic Ocean as one of the world’s last untapped frontiers, a place with tremendous reserves up for grabs. The Chukchi Sea alone is estimated to contain 15.4 billion barrels of oil that can be recovered with existing technology, according to the government’s ocean energy bureau.

Shell nodded to the area’s continued potential in its statement Monday. “For an area equivalent to half the size of the Gulf of Mexico, this basin remains substantially under-explored,” the company said.

here is the Anchorage Daily New’s report

[B]Shell abandons offshore oil exploration in Alaska’s Arctic[/B]

Erica Martinson September 28, 2015

Royal Dutch Shell will abandon its Arctic oil exploration efforts in Alaska’s Chukchi Sea after spending billions of dollars on test drilling, finding reserves were “insufficient” to continue, the company announced Monday in London.

The company cited the high costs of drilling, disappointing test drilling results and an “unpredictable” regulatory environment leading up to the decision, which followed $7 billion in company spending in recent years.

Related:
Shell CEO: Alaska drilling efforts could end after this season

"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. However, this is a clearly disappointing exploration outcome for this part of the basin,” Marvin Odum, director of Shell Upstream Americas, said in a statement.

The company will seal its Burger J well west of Barrow, according to Shell spokesman Curtis Smith. The company has no plans to drill at its Burger V well, Smith said.

The two rigs – the Polar Pioneer and the Noble Discoverer – will head south, along with dozens of support vessels.

The drilling efforts held some last-chance hopes for filling the quarter-full trans-Alaska pipeline. Surveys by the federal government estimated the Chukchi and Beaufort seas could hold more than 26 billion barrels of oil. Shell hoped to continue exploration for another year and be shipping oil south by 2020.

This summer, Shell drilled 6,800 feet into the basin, located in about 150 feet of water and 80 miles offshore, searching for oil with great expectations for massive, untapped reserves. The company noted that the basin, which is about half the size of the Gulf of Mexico, “remains substantially under-explored.”

The decision means that “only further exploration will determine the true potential of this basin,” Smith said.

Further exploration is over “for the foreseeable future,” the company said, noting an “unpredictable federal regulatory environment in offshore Alaska.’

President Barack Obama has defended his administration’s approval of test drilling in the Arctic, despite strong criticism from environmental groups. But leading Democratic presidential candidate Hillary Clinton has expressed opposition to the decision, and questions remain about future permitting and short lease periods, relative to the time it takes to get from test to drill in the difficult climate and given a limited summer drilling season.

And just last week, a dozen senators wrote Obama to protest support of drilling in the Arctic, arguing it is inconsistent with the president’s climate change policies.

The current federal permitting system “brings high levels of operational uncertainty to offshore Alaska planning. Under normal circumstances, a frontier exploration program of this complexity would have taken significantly less time,” Smith said.

Environmental groups cheered Shell’s decision, which followed high-profile protests and arguments that drilling in the Arctic could have disastrous ecological consequences in the event of a spill, particularly for polar bears, walruses and ice seals.

Sierra Club executive director Michael Brune called the announcement “joyous news” and said he hoped it would lead Obama to cancel 2016-17 lease sales and remove Arctic drilling from the 2017-2022 Outer Continental Shelf five-year lease plan.

Margaret Williams of the World Wildlife Fund called news of Shell’s withdrawal stunning.

“That’s incredible. That’s huge,” she said from Anchorage. “All along, the conservation community has been pointing to the challenging and unpredictable environmental conditions. We always thought the risk was tremendously great.”

“Shell’s announcement is a very good news for the marine environment, sensitive coastal lands and the Arctic communities that would be devastated by a major oil spill,” said Lois Epstein, a licensed engineer and Arctic program director for The Wilderness Society.

“Hopefully, this means that we are done with oil companies gambling with the Arctic Ocean,” Epstein said.

“With this pipe dream ended, we can now stop arguing about Shell and focus on moving forward,” said Susan Murray, deputy vice president of Oceana. “Shell’s announcement today allows the government to take a step back to apply careful planning, precaution, and science to forge a sustainable future for the Arctic.”

After about $7 billion in spending on the Arctic drilling effort, Shell Alaska still has $1.1 billion in contractual commitments in the area, the company said.

[B]The company holds 275 leases in the Chukchi Sea, which expire in 2020, and 140 leases in the Beaufort Sea, which expire between 2017 and 2019.
[/B]
Royal Dutch Shell’s “A” stock tumbled about 2 percent Monday on the New York and London exchanges after the news broke.

The full breadth of the decision’s impact could be clearer upon release of third-quarter financial results Oct. 29. The company earned $3.4 billion in net profit in the second quarter of this year.

The project has been plagued with difficulties, from rapidly falling oil prices to damaged vessels and federal fines, that have raised the cost and slowed the progress of the drilling effort.

so it actually shows that Shell is going to lose quite a few leases now unless they can cut a deal with the Feds which I believe they will try to do

[QUOTE=c.captain;169552]

so it actually shows that Shell is going to lose quite a few leases now unless they can cut a deal with the Feds which I believe they will try to do[/QUOTE]

all depending on how much credit they still have with the Feds. Doesn’t sound like a great time for them now to immediately sit at the table and negotiate deals (in their favour).