Shell had the strong backing of Alaska officials and business leaders who want a new source of crude oil filling the trans-Alaska pipeline, now running at less than one-quarter capacity.
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Shell holds exploration leases for 275 plots in the Chukchi Sea, the stretch of water that separates Alaska from Russian Federation north of the Bering Strait.
Several other companies are reportedly eyeing energy exploration projects in the Arctic, but absent a dramatic increase in oil prices and a relaxation of government regulations – none are likely to proceed. Therefore, in a political season with much at stake, energy development in the Arctic could clearly have reached a hinge moment when it may conclusively shift in one direction or the other based on the outcome of the 2016 presidential election.
A chairman for Shell said the company will continue to be a major player in the energy market because the world needs Shell’s systems capability and distribution expertise – even if the world one day might not need Shell’s oil.
Grafe says it also provides a “wonderful” opportunity for the Obama administration to shut down drilling in the Arctic Ocean for good.
“I would not hang my hat on it necessarily, but it’s a glimmer of hope that they have not yet relinquished their leases”, he said.
“It’s no surprise that Greenpeace once again chooses to focus on publicity stunts rather than engage constructively in the debate about how to meet the world’s growing demand for energy while reducing Carbon dioxide emissions”, he said. “So we’re having to fly in fuel – and wherever you fly in fuel, you’re adding $2 to the price”.
Shell, and a few smaller oil companies, will keep their leases in the Arctic for a few more years.
U.S. Sen. Lisa Murkowski had submitted legislation requiring that federal revenues received in the project would be shared with the state, a deal that could have been worth hundreds of millions annually for the Alaska treasury if the bill had passed and oil was produced.
Greenpeace says it’s time to make the Arctic ocean off-limits to all oil companies.
Thompson said: “This polar bear has been outside Shell’s headquarters for a month, representing the seven million people who mobilised to fight its Arctic drilling plans”. Disappointing results from that well led Shell to announce Monday it was ceasing its Alaska Arctic operations for the foreseeable future. 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. But when it comes to climate change, it doesn’t matter whether oil is pulled out of the Chukchi Sea in Alaska or the Bakkan formation in North Dakota. France’s Total SA was among companies that drilled off Greenland in the 1970s and Shell first discovered oil off Alaska in the late 1980s. Indeed, oil exploration projects are being scaled back worldwide, so Shell isn’t the only corporation that’s doing the math.
Walker says he’s contacted the White House to set up meetings about the impact of Shell’s decision on the state.
“In this case it hasn’t paid off, as there wasn’t enough there to justify the risk”, said the spokeswoman.
Miyoko Sakashita, oceans director for the Center for Biological Diversity, said Shell’s experience and public pressure may serve as a warning message to other companies.
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Alaska Governor Bill Walker said he’s promised Alyeska he will help find new production to keep the pipeline running.
