Shell pulls the plug on Arctic exploration

London

Royal Dutch Shell has abandoned its Arctic search for oil after failing to find enough crude in a move that will appease environmental campaigners and shareholders who said its project was too expensive and risky.

The withdrawal came six weeks after the final U.S. clearance and three months after Shell was still defending the project, a rapid change of heart for such a large company that shows it is preparing for a prolonged period of low oil prices while trying to close its $70 billion takeover of rival BG.

Shell has spent about $7bn on exploration in the waters off Alaska so far and said it could take a hit of up to $4.1bn for pulling out of the treacherous Chukchi Sea, where icebergs can be as large as New York’s Manhattan island.

Environmental campaigners and shareholders have also pressured Shell to drop Arctic drilling. Some are worried an oil spill would harm protected species while others are concerned about the cost after oil prices more than halved in a year. Shell said the decision to withdraw from the area reflected poor results from its Burger J exploratory well, the project’s high costs and the unpredictable federal regulatory environment in the area off the U.S. state of Alaska.