LONDON (Alliance News) - Royal Dutch Shell PLC on Monday said it has plugged and abandoned the Burger J exploration well in the Chukchi Sea in Alaska and said it will stop further exploration activity in the Alaska region for the foreseeable future.
The oil and gas major said the well was drilled to a total depth of 6,800 feet over the summer within a basin which had demonstrated a number of the key features of a major petroleum basin and which is substantially under-explored.
But Shell said that while it found indications of oil and gas in the Burger J Well, these were not sufficient to pursue further exploration activity at the prospect and, therefore, the well has been plugged and abandoned.
Shell said it will now cease further exploration activity in offshore Alaska for the foreseeable future, given the result from the Burger J well, the high costs associated with the project and the "unpredictable federal regulatory environment in offshore Alaska."
The group said it expects to book financial charges as a result of putting a halt to the Alaska exploration work and would provide further updates in its third-quarter results. It said the carrying value of its Alaska assets is around USD3.0 billion, with around USD1.1 billion in future contractual commitments.
"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," said Marvin Odum, director of Shell Upstream Americas.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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