Northwest Shipbuilder: Shell Leaving Arctic Is Bad For Business
Shell announced Monday it will seal and abandon the test well it drilled in Alaska's Chukchi Sea, and end its offshore exploration in the Arctic for the foreseeable future.
The company cited high costs, challenging federal regulations and poor results from a test well.
"The area is likely to ultimately be of strategic importance to Alaska and the U.S.," said Marvin Odum, director of Shell Upstream Americas, in a press release. "However, this is a clearly disappointing exploration outcome for this part of the basin."
Shell has spent $7 billion to date on its prospects off Alaska's coast.
The Pacific Northwest has served as a key staging ground for Shell's Arctic fleet and for environmental protesters who oppose drilling there. Businesses in the Northwest that have dealings with Shell could lose out if the oil company pulls out of the region.
"This will have a meaningful, negative effect on our long term business, from Oregon to Washington to Alaska, should the current decision continue for the long run," wrote Frank Foti, the CEO of Vigor Industrial, a Portland-based shipbuilding and repair company.
"We are disappointed in the decision, and will continue to support safe and environmentally responsible domestic efforts to explore for oil and gas."
In July, an icebreaker called the Fennica that was part of Shell's fleet was sent to Vigor's Swan Island dry dock in Portland for repairs, prompting protesters with Greenpeace to suspend themselves from the St. John's bridge to prevent the Fennica from returning to the arctic. The protesters were removed after 72 hours.
In 2014, Vigor installed the largest dry dock in North America, and acquired the Seattle shipbuilding company Kvichack. At the time of the acquisition, Foti said he hoped to expand Vigor's role serving offshore oil and gas operations in the Arctic.
Vigor employs 2,500 people in Oregon, Washington, and Alaska, according to the company’s website.
"We hope that the recent attention given to environmental impacts about the way we all live as human beings brings about a more considered dialogue about environmental integrity and economic balance for our region," Foti said.
Environmentalists, meanwhile, welcomed news that Shell will suspend its operations.
“This is a victory for everyone who has stood up for the Arctic. Whether they took to kayaks or canoes, rappelled from bridges, or spread the news in their own communities, millions of people around the world have taken action against Arctic drilling. Today they have made history," said Anne Leonard, Greenpeace USA Executive Director, in a press release.
Oregon Sen. Jeff Merkley, a vocal opponent of Arctic drilling, also issued a press release, and called for further action from the Obama administration.
"Building on today’s news, the U.S. should seize this moment to use its chairmanship of the Arctic Council to develop an agreement among all Arctic nations to end offshore drilling,” he said.
Citing global climate change, Merkley also called for limits on other types of fossil fuel extraction on public lands, including new coal leases and offshore oil development.
"To avoid pretty catastrophic consequences, we have to leave 80 percent of the known fossil fuel reserves in the ground," Merkley said.
"It makes little sense for the U.S. to be facilitating new exploration and leases, certainly on public property."
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