Royal Dutch Shell is to suspend its controversial drilling in Arctic waters off Alaska as part of a multibillion-dollar scaling back of spending on new projects under Ben van Beurden, chief executive.
The Anglo-Dutch oil major said recently that a recent US appeals court decision challenging the granting of licences in the Chukchi Sea off northwest Alaska had prompted it to suspend plans for further exploration in the area.
“This is a disappointing outcome, but the lack of a clear path forward means that I am not prepared to commit further resources for drilling in Alaska in 2014,” Mr van Beurden said.
Shell’s retreat on plans to resume Arctic drilling this summer came as Mr van Beurden, who took over as chief executive this month, set out plans for sharp cuts in the company’s investment spending this year and further disposals to boost cash flow.
Shell’s controversial presence in the Arctic, US shale lands and the Niger delta is in doubt after the oil group announced a sweeping strategic overhaul that includes the suspension of its Alaskan drilling programme.
Taking the knife to some of his predecessor’s pet projects, new chief executive Ben van Beurden said that the Anglo-Dutch company might have gone “too quickly” into shale exploration in the US and signalled a partial or total retreat from its onshore operations in Nigeria.
Van Beurden’s plans, including a multibillion-pound programme of disposals and writedowns, were announced in the wake of a tumultuous fourth quarter that saw earnings plunge 71% to $2.1bn (£1.3bn) while oil and gas production fell 5%.
“We have not always made the right capital choices,” van Beurden said at a briefing in London as he revealed a $687m writeoff in North America from shale, gas and the damaged Arctic drilling rig Kulluk.
He blamed poor markets as well as internal failures for its problems as he dramatically pulled the plug on Shell’s controversial scheduled drilling programme in the Alaskan Arctic this summer. Van Beurden admitted the exploration drive in the Chukchi and Beaufort seas, which has cost $5bn so far, was “under review” amid a torrent of negative campaigning from green groups.
A swath of onshore shale oil and gas assets in North America, with a balance-sheet value of $24bn, are also being considered for disposal or writedowns, while $1bn has been knocked off US shale drilling planned for this year. “You could argue we went in too far, too quickly [into shale],” he said.
Source | http://www.ft.com