Shell abandons plans for Alaska Arctic offshore drilling this year

[Jesus Malverde]

Shell is abandoning hopes of drilling in the Arctic waters off Alaska this year, the latest blow to the company’s effort to exploit huge potential in the petroleum-rich but sensitive region.

The decision came as Shell reported a steep earnings drop and its new CEO announced plans to restructure operations to improve the company’s cash flow.

CEO Ben van Beurden cited last week’s court ruling that threw offshore Arctic oil leases into question. The 9th U.S Circuit Court of Appeals agreed with environmental and Alaska Native groups that the federal government underestimated how much oil drilling would happen when it sold the leases in 2008.

Van Beurden told investors the court ruling raised “substantial obstacles” for Shell’s plans in Alaska waters.

http://www.adn.com/2014/01/30/3298785/shell-abandons-plans-for-alaska.html

[Jesus Malverde]

1. Earlier

A federal appeals court ruled Wednesday that the Interior Department botched an environmental analysis underpinning the 2008 sale of oil-drilling leases in Arctic waters off Alaska's coast.

The decision, from the U.S. Court of Appeals for the 9th Circuit, about the sale of leases in the Chukchi Sea arrives as Royal Dutch Shell is weighing resumption of attempts to drill for oil in the region.

Bloomberg unwraps the divided decision here, noting it could delay drilling efforts by companies including Shell and ConocoPhillips that bought leases in the contested 2008 sale.

The court found that Interior wrongly based its environmental analysis on an estimate of 1 billion barrels of recoverable oil from the Chukchi leases, a figure green groups that sued the department called too low.

"We agree with plaintiffs that the agency's estimate of one billion barrels was chosen arbitrarily, and that this arbitrary decision meant that the agency based its decision on inadequate information about the amount of oil to be produced pursuant to the lease sale," the decision states.

Shell, which is mulling another stab at drilling off the U.S. coast in the Arctic after a series of mishaps in 2012, told the Associated Press that it's reviewing the decision.

Environmental groups cheered the ruling and quickly sought to use it as political ammunition in their campaign against Arctic drilling, which they contend is too risky.

http://www.nationaljournal.com/energy/court-decision-may-cloud-arctic-drilling-plans-20140122

[Blue_In_AK]

2. Woo-hoo!

Shell totally botched their previous attempts to get something going up here. I want them to just go away.