Shell pulls plug on arctic drilling in “unmitigated defeat” for big oil
Oil giant Royal Dutch Shell has ceased its Arctic oil and gas operations off the coast of Alaska, citing disappointing test results and a "challenging" regulatory environment.
Shell stated today (28 September) that, while there were indications of oil and gas reserves in the Burger J exploration well in Alaska’s Chukchi Sea, the amount was not sufficient enough to warrant further drilling.
The move has been wholeheartedly welcomed by green groups and campaigners, following years of lobbying led by Greenpeace’s ‘Save the Arctic’ movement.
Shell Upstream Americas director Marvin Odum said: “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. However, this is a clearly disappointing exploration outcome for this part of the basin.”
Shell has spent about $7bn (£4.6bn) on offshore development in the Arctic region, under the belief that there would be substantial deposits, but with this announcement, operations are being ended for the “foreseeable future.”
It is expected that Shell will take a financial hit of around £4.1bn from the move, to be confirmed with the company’s third quarter results.
Movement of millions
The decision has been welcomed by a host of environmental campaigners. Greenpeace UK executive director John Sauven said: “Big oil has sustained an unmitigated defeat. They had a budget of billions; we had a movement of millions. For three years we faced them down, and the people won.
“The Save the Arctic movement has exacted a huge reputational price from Shell for its Arctic drilling programme. And as the company went another year without striking oil, that price finally became too high. They’re pulling out.
“Soon the nations of the world will gather in Paris to negotiate a deal on climate change. Shell’s defeat shows which way the wind is blowing. If a movement of seven million people can beat one of world’s biggest energy companies, think what we can do when we come together in our tens and hundreds of millions.
“This is a moment to appreciate that when we assert our power, we can win extraordinary victories in the fight against climate change.”
— Greenpeace (@Greenpeace) September 28, 2015
Friends of the Earth chief executive Craig Bennett said: “This is wonderful news for the people and wildlife of the Arctic region, but it must become a turning point in the fight to prevent catastrophic climate change.
“Just think what the $7bn Shell spent in the Arctic could have done for our climate and energy system if it had been invested in solar, wind and tidal power, rather than being wasted on looking for yet more oil that we cannot burn.”
Toys out the pram
In August of this year, Shell received permission from the US Government to drill in the Arctic Ocean for the first time since 2012. President Obama announced the permission during a state visit to Alaska where he was accused of hypocrisy for promoting climate change while simultaneously backing the exploration. Green campaigners publicly opposed the operations before the final permission was even granted.
Standout lobbying efforts from Greenpeace including the recent month-long run of musical protests against Arctic oil drilling which took place outside Shell’s offices in London, two weeks before the US Government confirmed the deal. Greenpeace also successfully lobbied for toymaker Lego to end its 50-plus year sponsorship with Shell through a viral video depicting the Arctic, made from Lego, being covered in oil.