Shell pulls out of Alaska

The company said no further drilling work will be undertaken ”for the foreseeable future” at the Burger J well - which sits approximately 150 miles from Barrow, Alaska in the Chukchi Sea - because of insufficient oil and gas discovery.

Shell also said high project costs and the challenging and unpredictable regulatory environment were major factors in the company’s decision to end its operations in offshore Alaska.

This is a clearly disappointing exploration outcome for this part of the basin

Shell US director Marvin Odum

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.”

In reaction to yesterday’s news, Greenpeace UK’s executive director John Sauven said big oil had sustained an unmitigated defeat.

“They had a budget of billions, we had a movement of millions. The ‘unpredictable regulatory environment’ that forced Shell out of the Arctic is otherwise known as massive pressure from more than 7 million people. For three years we faced them down, and the people won,” Sauven said.

Greenpeace’s ‘Save the Arctic’ movement, which boasts a number of high-profile backers including US President Barack Obama, was launched as a means of stopping drilling in the Arctic, while also working to battle the effects of climate change.

“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,” Sauven said.

Having already spent well in excess of £4.5 billion on its Alaskan drilling project, Shell said it expects to take further financial charges of roughly £2.7 billion as a direct result of yesterday’s announcement.

This comes after Shell reported a 37% fall in its second-quarter profits during July, forcing the company to announce plans to cut 6,500 jobs and reduce capital spending by 20% this year.