On September 28, 2015, Royal Dutch Shell (Shell) announced its decision to cancel its Arctic drilling operations after unsuccessful exploratory drilling in the Chukchi Sea off the northwest coast of Alaska. Shell decided to exit the Arctic after an investment of approximately $7 billion in oil exploration, citing disappointing exploratory results at the Burger J prospect, high operating costs, and strict U.S. regulations.

The decision is yet another setback for Shell which had halted exploration in the Arctic for three years after a 2012 effort that resulted in a drilling rig running aground. In addition to low global oil prices, other difficulties in the Arctic include significant regulatory hurdles, changing ice conditions, ongoing technical issues, and persistent environmental protests. Absent regulatory clarity, industry experts have voted against further exploration in the region.

The withdrawal is a victory for environmentalists who are opposed to drilling in the Arctic to protect its sensitive wildlife population. Shell’s efforts have been dissuaded by environmental protests pointing to the potential for spill-related damages in the region and increased oil dependency from developing new long-term wells.

Originally published by EnerKnol.

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