Shell Ceases Alaska Exploration Activity

Shell Ceases Alaska Exploration Activity
Shell will cease exploration activity offshore Alaska after failing to make a commercial find at the Burger J well, located in Alaska's Chukchi Sea.

Royal Dutch Shell plc announced Monday that it will cease exploration activity offshore Alaska after failing to make a commercial find at the Burger J well, located in Alaska’s Chukchi Sea.

The well was drilled to a total depth of 6,800 feet and although indications of oil and gas were found at Burger J, they were “not sufficient to warrant further exploration in the Burger prospect”, according to Shell. The Burger J well will now be sealed and abandoned. Due to the Burger J result, the high costs associated with the project and the challenging and unpredictable federal regulatory government in offshore Alaska, Shell has stated that it will stop exploring offshore Alaska for the foreseeable future.

With the balance sheet carrying value of Shell's Alaska position coming in at approximately $3 billion, and a further $1.1 billion of future contractual commitments lined up in the area, Shell expects to take a substantial financial hit as a result of this decision. The company currently holds a 100 percent working interest in 275 Outer Continental Shelf blocks in the Chukchi Sea and has indicated that it will safely de-mobilize people and equipment from the region.

Marvin Odum, director for Shell upstream Americas, commented in a company statement:

"The Shell Alaska team has operated safely and exceptionally well in every aspect of this year's exploration program. 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.”

Before the unsuccessful Burger J drilling campaign, Shell, which has spent about $7 billion on exploration in the Arctic, suffered another setback in the region in 2012 when an enormous drilling rig broke free and grounded, which led to the coast guard having to rescue 18 workers. The Obama administration gave the company permission to resume drilling for oil and gas in the area, for the first time since the 2012 incident, on August 17, 2015. The US Geological Survey estimates that the Arctic holds around 400 billion barrels of oil equivalent, which is roughly ten times the total oil and gas produced in the North Sea to date.

Reuters contributed to this article.

A graduate in journalism from Cardiff University, Andreas has eight years of experience as a business journalist. Email Andreas at andreas.exarheas@rigzone.com

WHAT DO YOU THINK?

Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Related Companies
Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE

More from this Author
Andreas Exarheas
Assistant European Editor | Rigzone
 -  Report: Operators Stepping Up Search f... (Mar 30)
 -  Eco-Friendly Tech Not Vital for Studen... (Mar 29)
 -  More Offshore Drilling Firms Likely to... (Mar 29)
 -  Right Fiscal Regime Needed for Hurrica... (Mar 28)
 -  BLOG: Brexit Likely to Have Direct Imp... (Mar 28)


Most Popular Articles

From the Career Center
Jobs that may interest you
Solids Control Technician
Expertise: Field Service Tech|Mud Engineer / Drilling Fluids|Rig Instrument Tech
Location: Midland, TX
 
United States Rock Springs: Service Supervisor I to III- Nitrogen
Expertise: Production Technologist|Well Servicing & Testing|WellSite Supervisor
Location: Rock Springs, WY
 
United States Vernal: Service Supervisor I to III - Frac/Acid
Expertise: Fracturing|WellSite Supervisor
Location: Naples, UT
 
search for more jobs

Brent Crude Oil : $52.96/BBL 1.03%
Light Crude Oil : $50.35/BBL 1.69%
Natural Gas : $3.19/MMBtu 0.63%
Updated in last 24 hours