Alaska fears fallout of Shell's Arctic drilling decision

Sacramento Bee ^ | September 28, 2015 | DAN JOLING, Associated Press

[WhiskeyX]

ANCHORAGE, Alaska —

Royal Dutch Shell's dry hole in the Chukchi Sea may be disappointing to shareholders, but it's potentially devastating to Alaska.

The company's decision to end oil exploration in offshore Alaska for the foreseeable future means the state must find another source to fill the 800-mile trans-Alaska pipeline and solve its economic woes, Gov. Bill Walker said.

[thackney]

Shell updates on Alaska exploration
http://www.shell.com/global/aboutshell/media/news-and-media-releases/2015/shell-updates-on-alaska-exploration.html
28 Sep 2015

Shell today provides an update on the Burger J exploration well, located in Alaska’s Chukchi Sea. The Burger J well is approximately 150 miles from Barrow, Alaska, in about 150 feet of water. Shell safely drilled the well to a total depth of 6800 feet this summer in a basin that demonstrates many of the key attributes of a major petroleum basin. For an area equivalent to half the size of the Gulf of Mexico, this basin remains substantially under-explored.
Shell has found indications of oil and gas in the Burger J well, but these are not sufficient to warrant further exploration in the Burger prospect. The well will be sealed and abandoned in accordance with U.S. regulations.

“The Shell Alaska team has operated safely and exceptionally well in every aspect of this year’s exploration program,” said Marvin Odum, Director, Shell Upstream Americas. “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 will now cease further exploration activity in offshore Alaska for the foreseeable future. This decision reflects both the Burger J well result, the high costs associated with the project, and the challenging and unpredictable federal regulatory environment in offshore Alaska.

The company expects to take financial charges as a result of this announcement. The balance sheet carrying value of Shell’s Alaska position is approximately $3.0 billion, with approximately a further $1.1 billion of future contractual commitments. An update will be provided with the third quarter 2015 results.

Shell holds a 100% working interest in 275 Outer Continental Shelf blocks in the Chukchi Sea.

Operations will continue to safely de-mobilize people and equipment from the Chukchi Sea.

[thackney]

[smokingfrog]

Volume on the pipeline, which funnels crude to Valdez in the south from Prudhoe Bay in the north, has declined with North Slope oil production during the past three decades. Flows are dropping about 5 percent a year and slid to 513,441 barrels a day in 2014 from a peak of 2 million in 1988, according to operator Anchorage-based Alyeska Pipeline Service Co.

[Ouderkirk]

And this shows the unpredictability of petroleum exploration.

What looks promising, ends up going nowhere.

[dragonblustar]

Funny this happens after Obama had gone up there.

[tillacum]

Interesting.

[Don Hernando de Las Casas]

for later

[thackney]

What looks promising, ends up going nowhere.

After spending billions of dollars....