Shell’s sudden and surprising decision to abandon its oil exploration in the Arctic received a range of reactions on Monday.
Economists said that it was a matter of mathematics with the plunging price of oil and the uncertainty surrounding federal regulations making the costly investment in Arctic exploration look even more risky.
Shell shareholders stayed calm, according to the Wall Street Journal. The general feeling among shareholders is that it was better to cut the losses despite pouring $7bn into the project so far, rather than risk even more on what the early results suggest may not have been as rich a prospect as first hoped.
Green groups were ecstatic but warned of the need to be vigilant as Shell were not the only oil majors with eyes on the fragile Arctic. The environmentalists’ biggest concern – apart from more fossil fuel production adding to climate change causes – had been the potential for catastrophic effects on the Arctic habitat in the event of a production mishap.
In its release announcing the decision Shell said it was pulling out of the Arctic “for the foreseeable future” because its exploration at the Burger prospect in the Chukchi Sea off Alaska did not warrant further investment.
Shell had worked hard and patiently, navigating federal red tape and dodging environmentalists’ ingenious protests to get back to the Arctic after a three-year absence. The final green light from the Obama administration came only on August 17, so this decision to up stumps does seem a little quick.
Industry insiders forecast a torrid time ahead for the offshore supply vessel providers as every out-of-action rig has multiple vessels dependent on it.
According to the Associated Press there are still some companies with smaller Chukchi Sea leases including Spain-based Repsol, Norway-based Statoil Hydro, Italy’s Eni Petroleum , Canada’s Iona Energy and US firm North American Civil Recoveries Arbitrage.