|See more of yesterday’s reports and reactions from U.S. Senator Lisa Murkowski (NGP Photo), various news sources yesterday, more sources today, and our commentary.|
Here is Tuesday’s Early Report…
…in wake of Shell’s announcement yesterday that after $7 billion invested and over a half decade of delay and disruption mostly caused by America’s government, it is withdrawing from Arctic OCS exploration. See statements (below) by Governor Walker, Alaska Oil and Gas Association, Consumer Energy Alliance, Congressman Don Young (NGP Photo) and American Energy Alliance. (Search our archives for many other Shell Oil Alaska references in the upper left search box, home page.) -dh
Yesterday, after absorbing Shell’s announcement, Alaska Governor Bill Walker (NGP Photo) said in a statement we received, “I thank the people of Shell for all their hard work on offshore exploration and their strong focus on safety.
We would have said, “…it is a reminder that underscores our need to better cooperation with the oil industry, to help it compete in every reasonable way and to endeavor to not be an obstacle to industry investment in our state.”
Instead, Walker doubles down on being a natural resource dictator. His actions can only lead to less investment, and, troublingly, an effort to socialize and seize ownership of natural resource projects.
How else can the governor’s arrogance be explained? -dh
“While the company’s recent announcement is disappointing, it is a reminder that underscores the need for Alaska to drive its own destiny through development of known gas resources, as well as rich oil reserves in a small area of ANWR.
“I contacted the White House this morning to set up meetings to discuss the potential impact of Shell’s decision, as well as Alaska’s need to explore in the 1002 area.” (Note: We are still waiting to hear of any oil & gas accomplishments for which Governor Walker is responsible. -dh, 10-10-17)
Alaska Oil and Gas Association President and CEO Kara Moriarty (NGP Photo) on Shell’s announcement
It is a sobering day for Alaska; both in the short and long-term,” Moriarty said yesterday.
“Today’s news from Shell is a painful reminder that exploration is expensive, involves huge risk, and does not guarantee success.
|Consumer Energy Alliance (CEA) President David Holt (NGP Photo) and CEA-Alaska President Anne Seneca issued the following statement yesterday in response to Shell’s announcement about its exploration activities offshore Alaska:
“Contrary to the previous rhetoric of anti-development activists, the 2015 Chukchi Sea exploration season provides further evidence that drilling can be done safely in the U.S. Arctic offshore. Furthermore, while extremists irresponsibly cheer the decision to put plans for further offshore exploration on hold for now, today’s announcement underscores the need for a more stable and reasonable federal regulatory environment,” said David Holt. “According to the U.S. Department of Energy, more than 63 percent of American energy will come from oil and natural gas by 2040. Finding and developing new resources is in EVERYONE’S interest, especially those Americans who can least afford to pay more for gasoline and electricity.”
According to Holt, “as the Interior Department mulls Arctic offshore drilling regulations and requests for U.S. Arctic lease extensions, and with the 2015 season accompanied by just-in-time permitting and conflicting agency decisions that prevented the drilling of more than one well, the federal government must commit to ensuring a regulatory environment that encourages rather than disincentivizes investment in the exploration of this region. CEA applauds Shell for its dedication to meeting consumer energy needs, as well as its patience with the unwieldy regulatory process and litigation delays over the past seven years and its persistent efforts to explore the potential for the production of American Arctic offshore energy resources.”
“Fossil fuels will be the primary contributor to meeting our energy needs for decades to come. At a time when lower 48 crude oil production is expected to decline over the long term, it is incumbent on federal decision-makers to do everything possible to accommodate the domestic development of these resources, including those in the Arctic.”
“Energy and the environment can and must occur together,” added Anne Seneca. “The environment is very important to Alaskans – and people everywhere. But so is economic opportunity and jobs for this and future generations. Developing our resources is important for our national security and future generations.”
For more information visit Consumer Energy Alliance.
“It would be interesting to know what the results would have been if Shell had been allowed this summer to conduct a multi-well program versus the very limited program of only one exploration well.
“It is now more important than ever for state policymakers and lawmakers to work together to ensure Alaska’s oil and gas industry has a viable future in this state; just like Shell, the companies working in the Cook Inlet and on the North Slope need legal, fiscal, and permitting predictability and consistency in order to make the sizeable investments required to keep the Trans Alaska Pipeline operational for many years.
“Shell’s departure is also a blow for the hundreds of employees who call Alaska home, as well as the many contractors and small businesses that began working on Arctic development as a result of Shell’s $7 billion investment.
“This decision will not halt oil and gas development in the Arctic Ocean, but, as of today, that development will be done by countries other than the United States that lack the stringent environmental standards demanded of industry in the U.S. There are very few companies that could meet these federal requirements and expensive demands, but even large companies with the financial resources like Shell will walk away from mega opportunities when they cannot continue to spend billions of dollars without any promise of a return.
“The Arctic Offshore has rightly been viewed as the next generation of oil and gas development in this state, so for those plans to disappear overnight is beyond painful. It is also a clear reminder about how a state dependent on one industry for 90 percent of its spending needs to look constantly for new developments in oil and gas development.
Moriarty concluded that, “With 27 billion barrels of known oil reserves in the Arctic Offshore, the Outer Continental Shelf was supposed to be Alaska’s next big opportunity.”
For more information visit AOGA.
More reactions keep coming in….
Bloomberg by Paul Barret. After spending $7 billion on a single well … what?
From Our Mid-Atlantic Energy Analyst friend:
Some of the biggest long-term prospects for providing major oil supplies a decade are disappearing from consideration.
The US Arctic is unlikely to see any further interest for some years to come. It may be that the oil simply is not there in commercial quantities (this writer remembers that Sohio drilled the most expensive dry hole to that time in 1979 from a man-made island off the coast of Alaska), or they simply wanted to preserve capital for less risky plays.
Regardless, this is not the only such regional play, which just a couple of years ago had great prospects, that now appears dead in the water (bad pun). Consider Brazil’s pre-salt plays; even if oil prices had not fallen, Petrobras was going to have real trouble making a success there (this is a whole set of separate columns). We see this play going nowhere the rest of this decade.
We also wrote recently about the North Sea entering into curtailment mode; there will be more shut-downs than new plots drilled. Offshore US is not even mentioned these days.
The Alaskan North Slope is struggling to keep an adequate daily flow of oil for the Alaska pipeline; it is not far from reaching a critical level, and it is certainly not helped by the present price level for oil that does flow. If it cannot stay above about 300,000 bpd, the whole thing faces shutdown and dismantlement. There are others.
The point is, the Megaprojects around the globe are getting long in the tooth, helped along by technology to keep production commercial but old just the same. If the next generation of Megaprojects is delayed by several years each, there will come a time when oil prices will once again be squeezed. It may not come soon enough to give much comfort to today’s producers, but it is coming just the same.
Congressman Don Young:
“I’m sure somewhere Sally Jewell and President Obama are smiling and celebrating Shell’s decision to cease operations off the coast of Alaska. For Alaskans, this announcement is a major blow to our local communities, the future of Alaska’s economy, and the Trans Alaska Pipeline. Make no mistake, this decision is the result of the Administration’s narrow-minded approach to responsible resource development – putting large areas off limits, while building insurmountable new hurdles to use areas that have been leased.”