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Shell's Big Back-Down

The oil giant announced that there simply isn't enough oil and natural gas to warrant any more drilling.
Kayakers protest Shell. (Photo: Backbone Campaign/Flickr)

Kayakers protest Shell. (Photo: Backbone Campaign/Flickr)

All that hotly contested oil in the Arctic? It’s not going anywhere. On Monday, Royal Dutch Shell announced it will stop offshore oil drilling in the Arctic, citing high costs and the challenges of federal regulation. It turns out the company's first well doesn't hold as much oil and natural gas as previously thought, either.

Just last month, the federal government gave Shell final approval to start drilling for oil in the Chukchi Sea—touted as one of the world's largest untapped oil reserves—off Alaska's northwest coast. Monday's announcement centers around the Burger J well, Shell's first proposed well this year, located off the shores of Barrow, Alaska, in relatively shallow waters—just 150 feet.

Shell's presence in the Arctic—and its ability to operate safely there—has been a source of controversy for quite some time.

Following the enticing potential of striking a plentiful oil basin, Shell drilled the well to a depth of roughly 6,800 feet earlier this summer. In the announcement made Monday, the company declared that there is simply not enough oil and natural gas in the Burger J well to warrant any more drilling. The well will be sealed and abandoned. Shell still has to pay off $1.1 billion toward existing contracts as well.

"The Shell Alaska team has operated safely and exceptionally well in every aspect of this year's exploration program," Marvin Odum, director of Shell Upstream Americas, said in a press release on Monday. "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. However, this is a clearly disappointing exploration outcome for this part of the basin."

According to Alaska Journal, Shell applied for permission to drill up to five wells, but only two—the Burger J and Burger V wells—were set to be drilled this year. Drilling had not yet started on the second well, Burger V, as United States Fish and Wildlife Service regulations prohibit rigs from operating within 15 miles of each other, so as to cut down on noise, which can harm marine mammals. In May, before the drilling took place, the Bureau of Ocean and Energy Management announced that the Burger wells "would not cause any significant impacts" to the environment.

Following the announcement Monday morning, environmentalists took to Twitter, praising both Shell's decision and the widespread activist effort against Arctic drilling that has surged in recent months:

"Kayaktivists" have been a large part of the protests, swarming around drilling support ships and rigs:

Shell's presence in the Arctic—and its ability to operate safely there—has been a source of controversy for quite some time. In 2012, one of the company's 571-foot drilling ships, the Noble Discoverer, slipped its anchor and drifted precariously close to shore. Last year, Noble Drilling, the company operating the drill ship, pled guilty to eight felony offenses for environmental and maritime crimes. As a result, Noble was required to pay $12.2 million in fines and community service payments. Among other charges, Noble was accused of willfully failing to alert the U.S. Coast Guard of hazardous conditions aboard the Noble Discoverer, according to the U.S. Department of Justice.

And as we reported last month, it is also debatable whether the Arctic could even handle a potential oil spill. From the remoteness of the region, to the challenges of detecting oil in ice-filled waters, to coastal communities and villages virtually unprepared for a spill, very little is known about clean-up and response in icy conditions, or about the effects of an oil spill on the Arctic food chain.

For now, at least, those worries can be put to rest.