{"id":9870,"date":"2015-09-29T08:06:33","date_gmt":"2015-09-29T15:06:33","guid":{"rendered":"http:\/\/spijue.wpengine.com\/news\/shell-move-dims-nations-oil-prospects\/"},"modified":"2015-09-29T08:06:33","modified_gmt":"2015-09-29T15:06:33","slug":"shell-move-dims-nations-oil-prospects","status":"publish","type":"post","link":"https:\/\/www.juneauempire.com\/news\/shell-move-dims-nations-oil-prospects\/","title":{"rendered":"Shell move dims nation’s oil prospects"},"content":{"rendered":"

ANCHORAGE<\/strong> \u2014 Royal Dutch Shell has abandoned its long quest to become the first company to produce oil in Alaska\u2019s Arctic waters, darkening the nation\u2019s long-term oil prospects and delighting environmental groups that tried to block the project.<\/p>\n

After years of effort, Shell is leaving the region \u201cfor the foreseeable future\u201d because it failed to find enough oil to make further drilling worthwhile.<\/p>\n

The company has spent more than $7 billion on the effort, slogged through a regulatory gauntlet and fought environmental groups that feared a spill in the harsh climate would be difficult to clean up and devastating to polar bears, walruses, seals and other wildlife.<\/p>\n

Shell persisted in hopes of finding a big new source of oil revenue and establishing expertise and a presence in the Arctic, which geologists estimate holds a quarter of the world\u2019s undiscovered conventional oil and gas.<\/p>\n

The drilling project also held the hopes of Alaska, which has seen oil production and revenues decline sharply in recent years, and the U.S. oil industry, which looked to Alaska\u2019s offshore Arctic as the next source of oil big enough to keep the country among the top three oil producers in the world along with Saudi Arabia and Russia.<\/p>\n

But Shell drilled to 6,800 feet about 80 miles offshore in the Chukchi Sea off Alaska\u2019s northwest coast and just didn\u2019t find much.<\/p>\n

\u201cShell 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.,\u201d Marvin Odum, director of Shell\u2019s operations in the Americas, said in a statement issued late Sunday. \u201cHowever, this is a clearly disappointing exploration outcome for this part of the basin.\u201d<\/p>\n

Known in the industry as turning up a \u201cdry hole,\u201d it\u2019s common for exploratory drilling to find little to no oil, especially in formations that have not been explored much in the past.<\/p>\n

But Shell\u2019s failure is notable because it was the only active drilling project in the sea, which Shell officials had called \u201ca potential game-changer,\u201d a vast untapped reservoir that could add to America\u2019s energy supply for 50 years.<\/p>\n

As recently as March, an Energy Department advisory council called for an immediate expansion of oil exploration in the American Arctic to avoid an increased reliance on imported oil in the future, in part because it would take more than a decade for oil in the Arctic to be discovered, developed and brought to market.<\/p>\n

Charles Ebinger, senior fellow for the Brookings Institution Energy Security and Climate Initiative, said in an interview that a successful well by Shell would have been \u201ca terribly big deal\u201d because it would have attracted others to the region.<\/p>\n

Though countries are pushing for cleaner energy sources, analysts predict that the world will need another 10 million barrels a day between 2030 and 2040 to meet growing demand, especially in developing countries, Ebinger said. The world now consumes 93.6 million barrels of oil every day.<\/p>\n

Regions like the Arctic \u201care one of the areas that, if we\u2019re going to be able to do this, we need to examine,\u201d he said.<\/p>\n

The U.S. Geological Survey estimates that American Arctic waters in the Chukchi and Beaufort seas contain 26 billion barrels or more of recoverable oil.<\/p>\n

The Arctic\u2019s vast oil and gas potential is exactly what worries scientists, who warn against tapping new sources of fossil fuels at a time when the world needs to drastically reduce emissions of carbon dioxide from fossil fuel consumption in order to prevent catastrophic changes to the earth\u2019s climate.<\/p>\n

Environmental groups, which had staged media campaigns aimed at tarnishing Shell\u2019s reputation and tried unsuccessfully to block Arctic-bound vessels, reveled in Shell\u2019s disappointment.<\/p>\n

\u201cBig oil has sustained an unmitigated defeat,\u201d Greenpeace UK Executive Director John Sauven said.<\/p>\n

Shell, which is based in The Hague, Netherlands, warned investors that the disappointing well results would lead to a charge against its earnings for the third quarter. It did not disclose the size of the charge but said the accounting value of the project is $3 billion, with another $1.1 billion in commitments to contractors. The company took charges of $2.1 billion in 2013 and $1.9 billion in 2014 also as a result of disappointing drilling results in the U.S.<\/p>\n

Shell\u2019s shares were down 3 percent Monday in afternoon trading, in line with a broad market decline, to $45.89. Shell\u2019s share price has fallen by around a third over the past year as oil prices have fallen by half, to about $45 a barrel.<\/p>\n

Those weak oil prices are forcing oil companies around the world to cancel or delay new exploration, especially in risky or high-cost areas. That was probably a factor in Shell\u2019s decision to abandon offshore Alaska.<\/p>\n

The Alaskan decision is \u201can example of not going forward with a project because there is just not enough oil and gas to make it economic,\u201d said Louise Cooper, an independent analyst at CooperCity. \u201cIf the oil price rises again and the well becomes economic, then it can try again.\u201d<\/p>\n

But Miyoko Sakashita, oceans program director for the Center for Biological Diversity, urged Shell not to make another attempt.<\/p>\n

\u201cPolar bears, Alaska\u2019s Arctic and our climate just caught a huge break,\u201d Sakashita said. \u201cHere\u2019s hoping Shell leaves the Arctic forever.\u201d<\/p>\n

___<\/p>\n

Associated Press Writer Pan Pylas in London contributed to this report.<\/p>\n","protected":false},"excerpt":{"rendered":"

ANCHORAGE \u2014 Royal Dutch Shell has abandoned its long quest to become the first company to produce oil in Alaska\u2019s Arctic waters, darkening the nation\u2019s long-term oil prospects and delighting environmental groups that tried to block the project. After years of effort, Shell is leaving the region \u201cfor the foreseeable future\u201d because it failed to […]<\/p>\n","protected":false},"author":107,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_stopmodifiedupdate":false,"_modified_date":"","wds_primary_category":4,"footnotes":""},"categories":[4],"tags":[230],"yst_prominent_words":[],"class_list":["post-9870","post","type-post","status-publish","format-standard","hentry","category-news","tag-state-news"],"_links":{"self":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts\/9870","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/users\/107"}],"replies":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/comments?post=9870"}],"version-history":[{"count":0,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts\/9870\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/media?parent=9870"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/categories?post=9870"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/tags?post=9870"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/yst_prominent_words?post=9870"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}