Arctic Drilling Battle Halts Abruptly as Shell Comes Up Dry

One of the biggest en­vir­on­ment­al fights in re­cent years is end­ing with a whim­per.

Roy­al Dutch Shell said Monday that it’s abandon­ing oil and gas ex­plor­a­tion off Alaska’s north­ern coast after an ex­pens­ive well came up es­sen­tially dry.

The de­cision ends, at least for the fore­see­able fu­ture, a key battle in the years-long polit­ic­al and lob­by­ing war over Arc­tic off­shore drilling that has reached in­to the 2016 pres­id­en­tial cam­paign.

Green groups have fought to pre­vent Shell from drilling in the Arc­tic Ocean, and Pres­id­ent Obama’s cau­tious en­dorse­ment of Arc­tic off­shore de­vel­op­ment has been a source of ten­sion between the White House and en­vir­on­ment­al­ists.

Shell began full-scale drilling of a well in what’s called the Bur­ger pro­spect last sum­mer after years of seek­ing Obama ad­min­is­tra­tion per­mis­sion, but the com­pany said Monday that “in­dic­a­tions” of oil and gas wer­en’t enough to “war­rant fur­ther ex­plor­a­tion.”

“Shell will now cease fur­ther ex­plor­a­tion activ­ity in off­shore Alaska for the fore­see­able fu­ture,” Shell said in a state­ment Monday.

The com­pany also dinged fed­er­al reg­u­lat­ors in lay­ing out why it’s put­ting the ef­fort on ice after spend­ing around $7 bil­lion over sev­en years on leases, plan­ning, and de­vel­op­ment costs.

“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,” the com­pany said.

Shell’s de­cision on leases in the Chuk­chi Sea that it spent more than $2 bil­lion to ob­tain in 2008 could de­ter in­dustry in­terest in the U.S. Arc­tic wa­ters more broadly.

Oth­er com­pan­ies with leases in the Beaufort and Chuk­chi Seas off Alaska’s coast, in­clud­ing Cono­co­Phil­lips and Statoil, had been watch­ing Shell’s ex­pens­ive at­tempt to find what could be huge re­sources there.

While Obama has come un­der heavy cri­ti­cism from en­vir­on­ment­al groups for al­low­ing Shell to be­gin drilling, GOP crit­ics say the Obama ad­min­is­tra­tion has moved too slowly in al­low­ing Arc­tic de­vel­op­ment and im­poses too many reg­u­lat­ory hurdles.

Hil­lary Clin­ton broke with Obama in mid-Au­gust when she de­clared that she’s flatly against drilling in the Arc­tic, a stance that drew im­me­di­ate cri­ti­cism from GOP White House hope­ful Jeb Bush, who is slated to lay out his en­ergy plat­form on Tues­day.

Shell’s white flag is wel­come news for en­vir­on­ment­al­ists who have spent years bat­tling to keep the area off-lim­its to oil rigs, ar­guing that off­shore oil and gas de­vel­op­ment there presents huge risks to an eco­sys­tem that provides a hab­it­at for po­lar bears, bowhead whales, and oth­er fra­gile spe­cies.

“Shell’s an­nounce­ment is very good news for the mar­ine en­vir­on­ment, sens­it­ive coastal lands, and the Arc­tic com­munit­ies that would be dev­ast­ated by a ma­jor oil spill,” said Lois Ep­stein, dir­ect­or of the Wil­der­ness So­ci­ety’s Arc­tic pro­gram.

Green groups and some re­search­ers also say tap­ping Arc­tic oil is out of step with con­front­ing cli­mate change.

The battle over Shell’s drilling cam­paign has been the most dir­ect col­li­sion over de­vel­op­ment of wa­ters in the U.S. Arc­tic that, ac­cord­ing to fed­er­al es­tim­ates, could con­tain 23 bil­lion bar­rels of re­cov­er­able oil.

But oth­er fights and de­cisions re­main, such as wheth­er In­teri­or De­part­ment reg­u­lat­ors will ex­tend the dur­a­tion of leases in the re­gion that ex­pire over the next sev­er­al years and wheth­er In­teri­or will auc­tion off new tracts as soon as next year.

“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,” said Mar­vin Odum, Shell’s top Amer­ic­an ex­ec­ut­ive, in a state­ment Monday.

Shell had be­gun pre­lim­in­ary drilling off Alaska’s Arc­tic coast in the sum­mer of 2012, but after a series of prob­lems and mis­haps, the com­pany did not win fed­er­al per­mis­sion to drill in­to oil-bear­ing zones that year.

However, the in­dustry con­tends that Arc­tic re­sources can be de­veloped safely. “The Shell Alaska team has op­er­ated safely and ex­cep­tion­ally well in every as­pect of this year’s ex­plor­a­tion pro­gram,” Odum said.

Lisa Murkowski, a GOP sen­at­or from Alaska who strongly backs off­shore drilling, said she’s “ex­tremely dis­ap­poin­ted” in the de­cision, and said blame lies with Obama ad­min­is­tra­tion reg­u­lat­ors.

“In the more than sev­en years that Shell has held leases in the Chuk­chi, it has only re­cently been al­lowed to com­plete a single well. What we have here is a case in which a com­pany’s com­mer­cial ef­forts could not over­come a bur­den­some and of­ten con­tra­dict­ory reg­u­lat­ory en­vir­on­ment,” said Murkowski, who is chair­wo­man of the Sen­ate En­ergy and Nat­ur­al Re­sources Com­mit­tee.

But Demo­crat­ic law­makers op­posed to Arc­tic off­shore drilling are pleased. Sen. Jeff Merkley of Ore­gon called it “tre­mend­ous news” and gave cred­it to op­pon­ents who have long battled de­vel­op­ment. “The Arc­tic sea is a unique, dan­ger­ous and in­cred­ibly fra­gile en­vir­on­ment, and off­shore Arc­tic drilling is simply not worth the risk,” he said.