The announcement was a huge blow to Shell, which was counting on offshore drilling in Alaska to help it drive future revenue.
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However, Greenpeace described oil drilling in the region as a “terrible mistake” that could damage the fragile Arctic environment and potentially spark an ecological disaster.
Anglo-Dutch energy giant Royal Dutch Shell said Monday it had scrapped its controversial offshore exploration in Alaska after failing to find sufficient quantities of oil and gas.
Environmental groups, however, had tried repeatedly to block the project, and welcome the news.
Shell drilled in 150ft (45m) of water about 80 miles (130km) off Alaska’s north-west coast.
Shell said it will take a financial charge as a result of the decision. The Burger J well will be sealed and abandoned. “However, this is a clearly disappointing exploration outcome for this part of the basin”, the BP official said.
Shell is in the midst of the £47 billion takeover of exploration firm BG, the biggest takeover in the sector since U.S. firm Exxon’s purchase of Mobil in 1998. Shell will end exploration off Alaska “for the foreseeable future”, the company said from its headquarters in The Hague, Netherlands. Shell has said it expects to complete the takeover of BG early next year.
The company, which has spent about US$7 billion on exploration in the Arctic, said its decision to withdraw reflects the project’s high costs and the unpredictable federal regulatory environment in the area.
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Most large oil companies have cut back on spending and put some exploration projects on hold since crude prices more than halved from last year’s peak.
