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.
- ALAN BAILEY