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NOVEMBER 17, 2015 — Norwegian multinational oil and gas company Statoil says it is optimizing its exploration portfolio and has decided to exit Alaska following recent exploration results in neighboring leases. Statoil
Shell found indications of oil and gas in the Burger J well, but they were not sufficient to warrant further exploration in the Burger prospect. The well will be sealed and abandoned in accordance with U.S. regulations.
In addition to the disappointing results from the Burger J, other reasons cited by Shell for deciding to end the Alaska program were its high costs 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.
Here’s the full text of today’s statement from Shell:
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.
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AUGUST 7, 2015—Inspectors from the U.S. Department of Interior’s Bureau of Safety and Environmental Enforcement (BSEE) are keeping a sharp eye on Shell’s “top-hole” drilling operations being conducted off of Alaska in
JULY 13, 2015 — MSV Fennica, the Finnish multipurpose icebreaker on charter to Shell, is to go to Vigor Industrial’s Portland, OR, shipyard for repairs to the one inch wide by three
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MAY 11, 2015 —The Bureau of Ocean Energy Management (BOEM) today conditionally approved Shell Gulf of Mexico, Inc.’s revised multi-year Exploration Plan (EP) for the Chukchi Sea, following a comprehensive review and