Arctic Oil - Shell Icebreaker

Shell Abandons Arctic Oil Operations

Arctic Oil: Abandon Ship

Arctic Oil - Chukchi Sea

The Chukchi Sea – Not pictured: The oil in question

Somewhere right now, thousands of environmentalists are probably still reeling from a few nights of wild celebration. Whether they were a deciding factor or not, (and they likely were not) Shell has decided to abandon their plans to drill for oil and gas in the Chukchi Sea, north of Alaska. This is an enormous decision, given the six-year lifespan of the project and the over $7 billion that went into it.

The efficacy of protests aside, some would argue Shell’s decision to walk away from the operation reflects changing social pressures. In addition, in the last decade, public opinion has shifted to one of distrust, or at least heightened awareness, and public policy and environmental law has become more stringent. Citing “the high costs associated with the project and the challenging and unpredictable federal regulatory environment in offshore Alaska.”, Shell acknowledged the legal difficulties involved in drilling.

Regardless of public opinion, money is the deciding factor in Shell’s operations, and it seems that despite their best guesses and research, there simply wasn’t enough oil to make the operation worthwhile. Many other companies including Norwegian-owned Statoil, had already suspended their explorations in the area, leaving Shell as the sole enterprise in the region. Due to an excess in oil in the world supplied by Asian markets, prices are incredibly low, forcing many companies to scale-back and refocus their pursuits. Low prices means producers will cut their expensive operations and focus in low-cost, high-volume methods of production. It seems that other companies and nations had assessed this risk, and Shell’s gamble did not pay off.

While Shell has stated it will end operations in the Chukchi Sea for the “foreseeable future”, is certainly seems possible that it is a region that has not seen the end of its interest by oil companies.

As an Ecotourism company, we have a pretty obvious opinion about the nature of high-risk activities that put natural spaces and wildlife in jeopardy. For more information on our driving principals, check out our page on “How we travel“.
Arctic Oil - Shell's rig

Shell oil rig