The controversial project is halted after failing to find significant quantities of oil.
The well was dry. Shell has officially ended its drilling expeditions in the U.S. Arctic after the project failed to reveal enough oil to be worth the effort.
As Bloomberg Business reports, Europe’s largest oil company has invested $7 billion dollars in the Burger J Well in Alaska’s Chukchi Well. The project hit one big snag in 2012 when the rig was destroyed but the company was looking to restart a new two-year long program. While the region does boast a high amount of natural gas and oil resources, the well couldn’t tap them sufficiently to make the spending worthwhile.
“This is clearly a disappointing exploration outcome,” Marvin Odum, director of the Upstream Americas unit at Shell, said. The official announcement of the well closure admitted that the 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 is expected to take a significant financial loss from the closure and stocks are officially down.
However, the news is welcome to the environmentalists who have been protesting the drilling since its inception. While the U.S. Interior Department stated in May that the drilling would have no environmental impact, multiple environmental groups including Greenpeace have fiercely decried the project, citing the rare and vulnerable Arctic system.
“Big oil has sustained an unmitigated defeat,” Greenpeace U.K. Executive Director John Sauven said of the news. “The Save the Arctic movement has exacted a huge reputational price from Shell for its Arctic drilling program.”
The well will be plugged and abandoned. No word on where Shell will go next.