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September 28, 2015 --- Vol. 21, No. 41September 2015

Shell pulls out of Chukchi Sea exploration

After completing its Burger J well in the Chukchi Sea to a depth of 6,800 feet and failing to find any significant quantities of oil or gas, Shell is terminating its Chukchi Sea oil exploration program, the company announced yesterday evening. There were indications of oil and gas in the well but insufficient to warrant further exploration of the Burger prospect, the company said. A previous Burger well drilled in the late 1980s had found a major gas pool in the Burger structure, about 70 miles offshore northwest Alaska - Shell had hoped to find an oil rim beneath the gas.

Shell says that, given the results of the drilling, the high costs associated with the Chukchi exploration and "the challenging and unpredictable federal regulatory environment in offshore Alaska" the company is ceasing exploration activity in offshore Alaska for the foreseeable future.

"The Shell Alaska team has operated safely and exceptionally well in every aspect of this year's exploration program," said Marvin Odum, director, Shell Upstream Americas. "Shell continues to see important exploration potential in the basin, and the area is likely to ultimately be of strategic importance to Alaska and the U.S. However, this is a clearly disappointing exploration outcome for this part of the basin."

Shell says that it anticipates writing off the approximately $3 billion balance sheet value and $1.1 billion in future contractual commitments associated with its multiyear Alaska offshore exploration.


Southern Miluveach start delayed

A series of technical problems has delayed development of the Southern Miluveach unit and startup is unlikely before the end of next year, according to the unit operator.

"Due to a myriad of mechanical and reservoir problems encountered while drilling during the period of the 2nd POD, none of the wells intended as producers were completed in the Kuparuk reservoir," operator Brooks Range Petroleum Corp. told state officials in a proposed third plan of development for the unit, filed Sept. 1. The state asked the company to provide additional information and has yet to approve or deny the new plan.

The problems largely involved subsurface conditions encountered during the drilling process earlier this year. The solution requires Brooks Range Petroleum to modify the drilling rig it had been using for the program or potentially find an alternative drilling rig.


See stories in Oct. 4 edition, available online Friday, Oct. 2 at www.PetroleumNews.com

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