Good news from the far North today as Shell announced that they would be withdrawing from their much-protested ventures in the Arctic.
“Shell will now cease further exploration activity in offshore Alaska for the foreseeable future. This decision reflects both the Burger J well result, the high costs associated with the project, and the challenging and unpredictable federal regulatory environment in offshore Alaska.”
The company pulls out having spent £4.6 billion getting this far, so it’s a big hit. Campaigners will no doubt be quick to take a slice of the credit, but this has been on the cards for a while. The low oil price means they could not possibly have brought their North Alaskan wells into production cheaply enough to turn a profit, even if oil was found in significant quantities, which it wasn’t. Greenpeace, who can presumably bring their polar bear back from outside Shell’s HQ now, were commenting just last week on how the economics didn’t stack up.
They were warned a good while before that too. I’m currently reading Jeremy Leggett’s book The Winning of the Carbon War. It describes conversations with oil executives in which he warns them that the combination of shale glut, the falling price of renewable energy and climate change action are combining to leave their assets stranded and their business model obsolete. Just this morning I read this striking rebuttal to that argument from Shell, reassuring their investors that all was well with their alternative energy projects:
“The world will continue to need oil and gas for many decades to come, supporting both demand, and oil and gas prices. As such, we do not believe that any of our proven reserves will become ‘stranded’ … The huge investment required to provide energy is expected to require high energy prices, and not the drastic price drop envisaged for hydrocarbons in the carbon bubble concept.”
That was March last year, a matter of weeks before the oil price took its nosedive. Looks like Leggett and his Carbon Tracker colleagues, the Greenpeace campaigners and the bears will all be raising a glass tonight.