Shell's Alaskan Drilling Stopped for the Year

Brian Hicks

Written By Brian Hicks

Posted September 18, 2012

Royal Dutch Shell Plc (NYSE: RDS.A) has shelved plans to drill for oil off Alaska this year following an incident where a containment dome sustained significant damage.

After repairs are accounted for, there won’t be time to drill far enough; instead, Shell will likely drill several top holes in preparation for next year. The company had plans of investing up to $1 billion in Alaskan exploration this year.

From Bloomberg:

“We are disappointed that the dome has not yet met our stringent acceptance standards, but as we have said all along, we will not conduct any operation until we are satisfied that we are fully prepared to do it safely,” the company said.

The drilling projects come after six years of initial preparation and are located in the Chukchi Sea region. So far, Shell has invested $4.5 billion in offshore leases and equipment while pushing back against at least 50 lawsuits from various environmental groups that oppose further Arctic drilling.

It isn’t the first setback for Shell in this regard, though. After the company began drilling, the rig had to be suspended and moved after only a day thanks to oncoming sea ice. Back in July, the Coast Guard had to perform an inspection on the drillship, the Noble Discoverer, after she slipped her mooring and began drifting toward the Aleutian Islands shores.

Exploratory drilling should resume shortly at the Burger A prospect and in the Beaufort Sea. Overall, the news saw Shell shares drop slightly to 2,254.5 pence in London.

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