Shell will cease further exploration activity in offshore Alaska after disappointing results from its Burger J well in the Chukchi Sea.
The oil and gas company said in a statement it had found "indications" of oil and gas but that these were "not sufficient to warrant further exploration in the Burger prospect." The statement added that the decision to stop activity in offshore Alaska reflected not only the poor Burger J well result, but the high costs associated with the project and the challenging and unpredictable federal regulatory environment in the area.
Shell has spent an estimated $7 billion on offshore Arctic development in the Chukchi and Beaufort seas.
The firm says its Alaska team has operated safely in this year's exploration programme, despite a series of drilling delays and mishaps. In 2012, the company's drilling rig, Kulluk, ran aground off the coast of Alaska, when it broke free from its towing ship in rough seas.
Environmental groups have argued that drilling operations in the Arctic pose unacceptable risks its fragile environment.
According to US government estimates, the Arctic holds 20% of the world's undiscovered oil and gas. Shell has a working interest in 275 outer continental shelf blocks in the Chukchi Sea and may return to the area in the future. "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, " said Marvin Odum, director of Shell upstream Americas.
