Second major oil company abandons Arctic exploration

Environmental groups are hailing the announcement that Norwegian oil giant Statoil is giving up on its oil and gas exploration in the Arctic Ocean north of Alaska. The reaction of the state’s elected officials has been far different.

On Tuesday, the company posted on its website that it “has decided to exit Alaska following recent exploration results in neighbouring leases.”

Statoil has held leases in the Chukchi Sea for seven years but has never drilled in Arctic waters off Alaska. Elsewhere in the Arctic, it remains an active driller.

Last month, Royal Dutch Shell announced it would abandon exploration in the Alaskan Arctic after what it said were poor results from the single test well it was able to drill.

Now, the other company with an interest in oil and gas drilling in Alaska’s Arctic federal waters has done the same.

“Decisions made by oil companies in the Arctic Ocean are finally starting to make sense,” said Susan Murray, deputy vice president of Oceana, a group dedicated to the environmental preservation of Earth’s oceans.

“Pursuing oil and gas in the U.S. Arctic Ocean is too risky and expensive both for the environment and companies’ economic portfolios,” she wrote in a prepared statement.

The seafloor underneath the Chukchi Sea is believed to hold about 15 billion barrels of recoverable oil and trillions of cubic feet of natural gas, but with oil prices in the basement, companies are reconsidering the cost of drilling far offshore in Alaska’s Arctic.

Shell’s sole exploratory well was estimated to cost $7 billion, when preparatory work is included.

In a statement Tuesday morning, Gov. Bill Walker said he was “disappointed in Statoil’s decision to not pursue future offshore development in the Chukchi,” and that Statoil’s decision is a sign that Alaska needs to develop onshore oil resources — including the coastal plain of the Arctic National Wildlife Refuge.

“This is extremely bad news for our state,” said Sen. Dan Sullivan, R-Alaska, in an email Tuesday morning. “When I was Alaska’s Commissioner of the Department of Natural Resources, I remember the excitement surrounding the opening of Statoil’s office in Anchorage, just as I remember the excitement surrounding Shell’s Arctic drilling program.”

Sullivan said he will continue to push to make it easier for companies to acquire oil and gas drilling permits onshore and offshore.

State Sen. Lesil McGuire, R-Anchorage, is a former chairwoman of the Alaska Arctic Policy Commission. By email, she said she is “concerned that these two decisions are a result of federal policies.”

“The federal government has placed economic development for the people of the north as one of their three Arctic Council Chairmanship priorities, but so far that priority has only materialized on paper,” McGuire said.

• Contact reporter James Brooks at 523.2258 or at james.k.brooks@juneauempire.com.

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