The decision had been expected after last month’s announcement by the Interior Department that Shell Oil Company would have to provide a detailed plan addressing numerous safety issues before it could resume its drilling operations in Alaska’s Chukchi and Beaufort Seas. Shell was forced to remove its two drilling rigs from the area and send them to Asia for repairs after a series of ship groundings, weather delays and environmental and safety violations during the 2012 drilling season. Shell, which has spent more than $4.5 billion on its exploration program, also called off its drilling program for this year.
“While we are confident in our own expertise and ability to safely conduct offshore Arctic operations, we believe that more time is needed to ensure that all regulatory stakeholders are aligned,” Trond-Erik Johansen, president of ConocoPhillips Alaska, said in a statement.
The statement cited a recent Interior Department report calling on the oil industry and federal government to coordinate efforts to develop standards for drilling, maritime safety and emergency response systems and equipment for the Arctic region.
ConocoPhillips said it welcomed working on that approach with the government before drilling. The company has 98 leases in the Chukchi Sea’s Outer Continental Shelf, a region that oil company geologists say has the potential to produce billions of barrels of oil in the coming decades.
“Once those requirements are understood, we will re-evaluate our Chukchi Sea drilling plans,” Mr. Johansen said.
Environmentalists have long opposed drilling in Arctic waters, arguing that it cannot be done safely because of powerful ice floes, winds and long periods of darkness, and that it would disturb the habitats of many threatened species including polar bears.
“ConocoPhillips has made a good choice,” said Michael LeVine, a lawyer for the environmental group Oceana. “As we’ve learned again and again, operating in Alaskan water demands preparation, care and attention to details companies have not yet proven able to provide.”
Senator Lisa Murkowski, an Alaska Republican who sits on the Energy and Natural Resources Committee, expressed disappointment but said she understood that the decision was necessary.
“Companies can’t be expected to invest billions of dollars without some assurance that federal regulators are not going to change the rules on them almost continuously,” she said. “The administration has created an unacceptable level of uncertainty when it comes to the rules of offshore exploration that must be fixed.”
The Norwegian company Statoil had already announced that it was putting off its plans to drill in the Alaskan Arctic waters from 2014 to 2015.
The Interior Department’s review, completed in early March, concluded that Shell had failed in a broad range of operational and safety tasks, including the towing of one of the two drilling rigs, which ran aground on an Alaskan island on New Year’s Eve. David Lawrence, the executive vice president who was in charge of the Alaska drilling program, recently left the company. The company said that the departure was “by mutual consent.”
This article has been revised to reflect the following correction:
Correction: April 10, 2013
An earlier version of this article misstated the day of ConocoPhillips’s announcement. It was Wednesday, not Tuesday.
Article source: http://www.nytimes.com/2013/04/11/business/energy-environment/conocophillips-suspends-arctic-drilling-plans.html?partner=rss&emc=rss