Oil Drilling on US Arctic Coast Put On Ice
Photo Credit: Alastair Grant / AP
Oil companies’ rush to find reserves off Alaska’s Arctic shores suffered a setback on Thursday after Shell said it would suspend its operations in the region — and possibly withdraw for good.
Royal Dutch Shell PLC is the main company to have purchased leases for oilfields off Alaska’s Arctic shores, but its attempts to drill have been halting due to technical and legal hurdles.
While other companies are still seeking to exploit deep-water Arctic fields nearby in Canada, Shell’s troubles may indicate that the difficulties outweigh the potential economic benefits.
“We will not drill in Alaska in 2014, and we are reviewing our options there,” Shell CEO Ben van Beurden told reporters in London.
Shell received a negative Federal court decision last week. Environmentalists are still challenging whether the government’s 2008 decision to open the area to exploration was correctly granted in the first place: it is covered by sea ice for much of the year.
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Photo Credit: Newscast
By Alistair Osborne.
Royal Dutch Shell will stop its exploration programme in Alaska this year as part of a refocusing of strategic priorities under new chief executive Ben van Beurden.
The oil giant, which stunned the market a fortnight ago with its first profits warning in 10 years, said its new boss was setting “an agenda for sharper performance and rigorous capital discipline”.
One immediate decision is that Mr van Beurden, who took over at the start of the year from predecessor Peter Voser, has called a halt to Shell’s controversial exploration in Alaska – a move that will be seen as a victory for environmental campaigners.
Mr van Beurden said he was responding to a US federal court ruling last week that the full range of environmental risks had not been assessed by the American government.
Shell said the ruling “raises substantial obstacles to Shell’s plans for drilling in offshore Alaska”.
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