Environmental activists tried unsuccessfully to stop Shell Oils’s attempt to drill in the Arctic. They drilled a 6,800 deep exploratory well and found that there is not enough oil and gas there to make exploration and production in the area worth while in such a hostile environment.
Shell is abandoning its controversial plans to drill for oil in the Arctic
But on Monday, Shell announced that it was abandoning its controversial Arctic drilling plans for a much more prosaic reason: The company simply hadn’t found enough oil and gas to justify further exploration “for the foreseeable future.”
At this point, Shell has spent at least $7 billion since 2008 buying up leases and trying to drill exploratory wells in the Chukchi and Beaufort Seas, north of Alaska. It’s a remote and forbidding environment, with dangerous ice floes and frequent storms. But geologists believe there could be up to 40 billion barrels of technically recoverable oil beneath these waters, enough to supply the entire United States for five years. So Shell had long thought the risk and high cost was worth it:
So what the environmental activists could not do the earth itself did. So Shell will eat the 7 billion dollars rather than throw more good money into a rat hole. Shell was the only player left, their competitors had already decided that the risks were not worth the potential benefits.
This announcement means that no one is likely to drill off the Arctic coast of Alaska anytime soon. All of Shell’s competitors, including Total and Statoil, had long ago shelved their plans to drill in the Chukchi and Beaufort Seas, deeming it too risky and difficult. Shell was the only gambler left, and everyone was waiting to see if they’d succeed. But at a time when global oil prices have plummeted, from $100 per barrel last summer to around $45 per barrel now, Shell has now decided it’s simply no longer worth the endless headaches.
And then of course there is the move to electric motor vehicles which will only be accelerated by the VW emissions scandal. BMW had already announced that it planned to be all electric or hybrid by 2020. Porsche is introducing an electric car that goes from 0 to 60 in 6 seconds and recharges in 15 minutes. Electric motors are 80% more efficient than the internal combustion engine develop more torque and require much less maintenance than ICE vehicles. There will be some infrastructure changes required but here in the Portland area we already have solar powered recharging stations. General Electric is busy developing battery powered tenders to replace the diesel tenders now in use to power electric locomotives.