Yesterday, Shell announced that it will stop its exploration drilling program in the Arctic in 2014.
The announcement comes a week after the Ninth Circuit Court of Appeals ruled that opening nearly 30 million acres of U.S. Arctic waters to oil exploration six years ago was illegal.
“This is a disappointing outcome, but the lack of a clear path forward means that I am not prepared to commit further resources for drilling in Alaska in 2014,” said Shell’s new CEO, Ben van Beurden. “We will look to relevant agencies and the Court to resolve their open legal issues as quickly as possible.”
Oil exploration began in the Arctic in 2008 when the U.S government sold $2.7 million worth of oil-drilling leases in the Chukchi Sea. Shell, which has spent around $5 million on its Arctic drilling program ($2.3 million on the leases alone) is the biggest leaseholder in the Arctic and the only one that has drilled there in recent years.
Thirteen environmental groups, two tribal groups, the Native Village of Point Hope and the Inupiat Community of the Arctic initiated a lawsuit, saying that the amount of oil that could be obtained from the leases far exceeded the one million barrels estimated by the Bureau of Ocean Energy Management (BOEM) in their environmental review approving the sale. On January 22, the court concluded that the environmental analysis was inadequate and that the estimate was “chosen arbitrarily.”
The appeals court returned the case to a district judge in Anchorage. The environmental groups want the leases revoked, but the judge could also direct the federal government redo the environmental assessment. Either way, it means the Arctic will be free from drilling for another year.
Copyright © 2014 by Marine Science Today, a publication of Marine Science Today LLC.