Shell Halts Alaska Oil Drilling After Disappointing Well Result

Shell forecast it will take related financial charges, according to a company statement on Monday. The balance sheet carrying value of its Alaska position is about $3 billion, with additional future contractual commitments of about $1.1 billion, The Hague, Netherlands-based energy explorer said. Shell is abandoning exploration after winning approval in August to drill the Burger J well in Alaska's Chukchi Sea. Success would have brought the company back to an area it left three years ago after a rig ran aground. That incident helped prompt the Obama administration to revisit U.S. rules for exploration in the region, while environmental groups have long-protested Shell's plans, saying a spill could cause an ecological disaster. Indications of oil and gas at the Burger J well weren't sufficient to warrant further exploration, according to the Shell statement. The company holds a 100 percent working interest in 275 Outer Continental Shelf blocks in the Chukchi Sea, it said. "Shell will now cease further exploration activity in offshore Alaska for the foreseeable future," the company said. "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." Alaska held almost 9 percent of the proved crude oil reserves in the U.S. in 2013, or about 2.9 billion barrels, according to the Energy Information Administration. Dry natural gas reserves were 7,316 billion cubic feet, or about 2 percent of the national total. Source: Bloomberg