Shell announced on Thursday that it intends to submit plans to resume exploratory drilling in the Chukchi Sea in the 2014 season. Drilling in Shell’s other Arctic interest, the Beaufort Sea, however, will not be pursued.
The news came as Shell reported disappointing third-quarter earnings that were nearly a third lower than in 2012. Shell cited lower demand for fuel and a drop in output, particularly in Nigeria, where security issues have forced shutdowns, as the primary reasons for the falling numbers.
Shell’s Arctic ambitions have, so far, been thwarted at every turn. The company suspended drilling off Alaska altogether last year, after a disastrous first year in 2012. Late permits, dangerous ice conditions and embarrassing equipment failures, all forced Shell out of the Arctic before a single well had been completed. Even as the company was moving equipment to warmer waters, one of its drill ships, the Kulluk, ran aground. Shell also had to pay $1.1 million in fines for air quality violations. Despite this inauspicious beginning, Chief Financial Officer Simon Henry told reporters on Thursday that Alaska “remains the most attractive single opportunity for the future, and is very much on the top of the priority list.”
To date, Shell has invested well over $5 billion in its Arctic drilling projects and spent 6 years fighting legal challenges from environmental groups worried about the fragile Arctic ecosystem, as well as the climate consequences of burning what Shell has referred to as its “multibillion barrel prize.”