Royal Dutch Sell has walked away from further offshore drilling in US Arctic waters, as exploration wells prove little reserves.
In a statement, the company said, ‘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.’
Shell said the offshore well would now be sealed and permanently abandoned inline with the US regulations.
The Anglo Dutch super major has spent around US$7 billion (GB£4.5bn), so far in the offshore exploration campaign that has drilled two offshore wells.
They have also seen an uproar of criticism and measures from protestors and high profile campaigners designed to stop the Arctic offshore exploration.
Shell is also contractually obliged to pay a further US$1.1 billion in fees to contractors for future services that will not be used due to the cancellation of the explorations.
With the high cost to Shell in both financial and reputation terms, and the current low price of oil, it is expected that Shell will now stay away from the oil exploration in the Arctic for many years to come.
The oil firm said, ‘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.’