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Shell abandons Arctic drilling after disappointing results

Operations in Alaska have been cancelled 'for the foreseeable future'

David Ryder/Getty Images

Royal Dutch Shell has abandoned its controversial attempts to drill for oil off Alaska's northwest coast, citing disappointing results from exploratory wells. According to a report from The New York Times, the company said that while it had found "indications of oil and gas" in the region's Burger prospect, "these are not sufficient to warrant further exploration." The decision, which will be welcomed by environmental campaigners, means billions of dollars of writedowns for Shell, which spent $7 billion — or around 20 percent of its exploration budget — since 2007 developing prospects in the Arctic.

"Shell will now cease further exploration activity in offshore Alaska for the foreseeable future," said Marvin Odum, director of Shell Upstream Americas, in a press statement. "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."

falling oil prices and environmental protests have made operations difficult for shell

The US government gave approval for Shell to drill in the area earlier this year, but the price of oil has since fallen dramatically, from above $110 a barrel in June, to less than $50 now. Shell's plans have also been hampered by environmental protests, with campaigners pointing out that any spills in the fragile region would be especially damaging, and that opening up new long-term wells only extends oil dependency.

Greenpeace welcomed the news, with the UK director John Sauven stating: "Big oil has sustained an unmitigated defeat. They had a budget of billions, we had a movement of millions. For three years we faced them down, and the people won. The Save the Arctic movement has exacted a huge reputational price from Shell for its Arctic drilling program. And as the company went another year without striking oil, that price finally became too high. They’re pulling out."