Shell pulls out of the Arctic (as expected)

Good news from the far North today as Shell announced that they would be withdrawing from their much-protested ventures in the Arctic.

Shell will now cease further exploration activity in offshore Alaska for the foreseeable future. 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 pulls out having spent £4.6 billion getting this far, so it’s a big hit. Campaigners will no doubt be quick to take a slice of the credit, but this has been on the cards for a while. The low oil price means they could not possibly have brought their North Alaskan wells into production cheaply enough to turn a profit, even if oil was found in significant quantities, which it wasn’t. Greenpeace, who can presumably bring their polar bear back from outside Shell’s HQ now, were commenting just last week on how the economics didn’t stack up.

They were warned a good while before that too. I’m currently reading Jeremy Leggett’s book The Winning of the Carbon War. It describes conversations with oil executives in which he warns them that the combination of shale glut, the falling price of renewable energy and climate change action are combining to leave their assets stranded and their business model obsolete. Just this morning I read this striking rebuttal to that argument from Shell, reassuring their investors that all was well with their alternative energy projects:

“The world will continue to need oil and gas for many decades to come, supporting both demand, and oil and gas prices. As such, we do not believe that any of our proven reserves will become ‘stranded’ … The huge investment required to provide energy is expected to require high energy prices, and not the drastic price drop envisaged for hydrocarbons in the carbon bubble concept.”

That was March last year, a matter of weeks before the oil price took its nosedive. Looks like Leggett and his Carbon Tracker colleagues, the Greenpeace campaigners and the bears will all be raising a glass tonight.

 

3 Comments on “Shell pulls out of the Arctic (as expected)”

  1. Adam Gallon September 30, 2015 at 12:38 pm #

    Another victim of the inexpensive oil & gas available due to frakking. The same reason unreliables are becoming even less economical & more reliant on punitive taxes on us, the consumer.
    I was in Morroco 2 weeks ago, not a solar panel to be seen.

    • Jeremy Williams October 1, 2015 at 10:56 am #

      Morocco’s loss then. And I’m afraid you’re not paying attention. The price of renewable energy is falling all the time, while oil and gas companies are running out of cheap sources to exploit. (Fracking isn’t a cheap source of energy, whatever the hype. Just look up the number of fracking companies going bust right now)

Trackbacks/Pingbacks

  1. The Winning of the Carbon War, by Jeremy Leggett | Make Wealth History - October 13, 2015

    […] repeatedly. Leggett writes about Shell’s insistence that its Arctic projects are good value, only for them to be overturned last month, just in time for October’s update. Shale bankruptcies are predicted and delivered. Meetings […]

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