Shell Oil ceases Alaska offshore Arctic drilling

FILE - In this April 17, 2015 file photo, with the Olympic Mountains in the background, a small boat crosses in front of the Transocean Polar Pioneer, a semi-submersible drilling unit that Royal Dutch Shell leases from Transocean Ltd., as it arrives in Port Angeles, Wash., aboard a transport ship after traveling across the Pacific before its eventual Arctic destination. The U.S. government on Monday gave Shell the final permit it needs to drill for oil in the Arctic Ocean off Alaska's northwest coast for the first time in more than two decades. (Daniella Beccaria/seattlepi.com via AP, File) MAGS OUT; NO SALES; SEATTLE TIMES OUT; TV OUT; MANDATORY CREDIT

ANCHORAGE, Alaska (AP) — Royal Dutch Shell will cease exploration in Arctic waters off Alaska’s coast following disappointing results from an exploratory well it just completed.

Shell found indications of oil and gas in the well in the Chukchi Sea about 80 miles off Alaska’s northwest coast, the company said Monday in a release from The Hague, Netherlands. However, the petroleum was not in quantities sufficient to warrant additional exploration in that portion of the basin, the company said.

An activist looks towards the rising sun as she hangs from the St. Johns bridge as part of a protest to block the Royal Dutch Shell PLC icebreaker Fennica from leaving for Alaska in Portland, Ore., Thursday, July 30, 2015. The icebreaker, which is a vital part of Shell's exploration and spill-response plan off Alaska's northwest coast, stopped short of the hanging blockade, turned around and sailed back to a dock at the Port of Portland. (AP Photo/Don Ryan)
An activist looks towards the rising sun as she hangs from the St. Johns bridge as part of a protest to block the Royal Dutch Shell PLC icebreaker Fennica from leaving for Alaska in Portland, Ore., Thursday, July 30, 2015. The icebreaker, which is a vital part of Shell’s exploration and spill-response plan off Alaska’s northwest coast, stopped short of the hanging blockade, turned around and sailed back to a dock at the Port of Portland. (AP Photo/Don Ryan)

Shell will end exploration off Alaska “for the foreseeable future,” the company said. “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 U.S.,” said Marvin Odum, president of Shell USA, in the announcement. “However, this is a clearly disappointing exploration outcome for this part of the basin.”

The decision reflects the results of the exploratory well in the Burger J lease, the high costs associated with Alaska offshore drilling and the challenging and unpredictable federal regulatory environment in offshore Alaska, the company said.

Shell has spent upward of $7 billion on Arctic offshore development in the Chukchi and Beaufort seas.

Monday was Shell’s final day to drill this year in petroleum-bearing rock under its federal permit. Regulators required Shell to stop a month before sea ice is expected to re-form in the lease area.

The company reached a depth of 6,800 feet with the exploratory well drilling in about 150 feet of water.

Environmental groups oppose Arctic offshore drilling and say industrial activity and more greenhouse gases will harm polar bears, walrus and ice seals.

Over the summer, protesters in kayaks unsuccessfully tried to block Arctic-bound Shell vessels in Seattle and Portland, Oregon.

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