Royal Dutch Royal Dutch Shell plc (ADR)(NYSE:RDS.A) said
on Monday that it has suspended drilling fir hydrocarbon deposits in the Arctic
region this year due to damage to its Arctic Containment Systems.
The containment system is critical safety equipment
that is mandatory if it is to get final approval to drill to great depths in
hydrocarbon zones. It helps to contain the spread of oil in the event of a
spillage. The company now plans to take up the drilling next year.
Last week Shell had called a temporary halt to its
drilling exercise off the coast of Alaska as a safety measure against the shift
in ice bergs.
Shell has got approval to drill shallow wells and the
company plans to complete as many of these as possible before tackling the
deeper wells next year.
The oil and gas producer needs to complete most of its
task before the cold weather takes over, as then ice would settle over the sea
and prevent further drilling. Ice starts forming as early as the end of this
month.
It is also planning to start preliminary drilling of
wells in the Beaufort Sea, which remains ice free for a long time.
This is a setback for the company as it has spent
about $4.5 billion in the quest to search for oil in the Arctic region. It is a
critical project both for the company as well as the economy in Alaska, where a
lot of jobs could be created.
"This critical program ... could be an important
national resource for the next several decades, and we are committed to doing
it safely and responsibly," Shell spokeswoman Kelly op de Weegh said in a
statement to the Los Angeles Times.
This is not the first time that Shell's oil
containment system has given it trouble, having undergone troubles with getting
retrofitted.
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