Shell Abandons Chukchi Sea Drilling Activities
Shell has issued a statement on the Burger J exploration well, located in Alaska’s Chukchi Sea, saying the well will be abandoned.
The Burger J well is approximately 150 miles from Barrow, Alaska, in about 150 feet of water. Shell drilled the well to a total depth of 6,800 feet this summer in a basin that demonstrates many of the key attributes of a major petroleum basin. For an area equivalent to half the size of the Gulf of Mexico, this basin remains substantially under-explored.
Shell has found indications of oil and gas in the Burger J well, but these are not sufficient to warrant further exploration in the Burger prospect, the company said. The well will be sealed and abandoned in accordance with U.S. regulations.
"The Shell Alaska team has operated safely and exceptionally well in every aspect of this year's exploration program," said Marvin Odum, Director, Shell Upstream Americas. "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 US. However, this is a clearly disappointing exploration outcome for this part of the basin.”
Shell will now cease further exploration activity in offshore Alaska for the foreseeable future. This decision reflects 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 expects to take financial charges as a result. The balance sheet carrying value of Shell's Alaska position is approximately $3 billion, with approximately a further $1.1 billion of future contractual commitments.
Shell holds a 100 percent working interest in 275 Outer Continental Shelf blocks in the Chukchi Sea. Operations will continue to safely de-mobilize people and equipment from the Chukchi Sea.