U.S. Regulations Prompt Shell to Abandon Alaskan Drilling Activities



The unpredictable Federal regulatory environment in offshore Alaska and the high costs associated with the project had forced Shell to cap and abandon a prospective Burger J exploration well where there are clear indications of a major petroleum basin in an area equivalent to half the size of the Gulf of Mexico.  The well was sealed and abandoned as per U.S. laws.

Shell has found indications of oil and gas in the Burger J well, located in Alaska’s Chukchi Sea approximately 150 miles from Barrow, in about 150 feet of water.  Shell drilled the well to a total depth of 6,800 feet.  Marvin Odum, Director, Shell Upstream Americas says, “Shell continues to see important exploration potential in the basin.”

All exploration activities had been stopped by Shell.  The company expects to take financial charges as a result.  The balance sheet carrying a value of Shell’s Alaska position is approximately $3 billion, with approximately a further $1.1 billion of future contractual commitments.  The company holds a 100 percent working interest in 275 Outer Continental Shelf blocks in the Chukchi Sea.  Operations will continue to safely demobilize people and equipment from the Chukchi Sea.  

Source: Shell