Shell Oil Company to take a $4.1 billion hit for halting oil exploration off the coast of Alaska after outcry from environmentalists and failing to find enough oil.
The company already spent $7 billion on the Arctic endeavor, but due to government regulations and sky-rocketing costs to fund the exploration, Royal Dutch Shell decided to bail on the project, despite finding evidence of gas in the region according to the company’s Monday press release.
“Shell has found indications of oil and gas in the Burger J well, but these are not sufficient to warrant further exploration in the Burger prospect. The well will be sealed and abandoned in accordance with U.S. regulations,” the Oil company wrote in the press release.
The Arctic oil endeavor was approved in August of this year by the Obama administration. But before and after Obama gave his nod of approval, environmentalist groups and politicos like Hillary Clinton condemned the project, and claimed it wasn’t worth the potential damage to the environment.
The U.S. Geological Survey contended the Arctic region holds about 30 percent of the world’s undiscovered natural gas, and 13 percent of undiscovered oil. Environmentalist organizations like Greenpeace, however, staged protests and campaigns like Save The Arctic to keep Shell from drilling and discovering the oil and gas.
“Big oil has sustained an unmitigated defeat. It had a budget of billions, we had a movement of millions,” Greenpeace UK executive director John Sauven said. “The ‘unpredictable regulatory environment’ that forced Shell out of the Arctic is otherwise known as massive pressure from more than seven million people.”
A Greenpeace official told Fortune.com, that the organization’s office was filled with “hugs and high fives” after Shell’s Monday announcement. (RELATED: Enviros Fundraise Off Shell’s Arctic Drilling Approval)
Besides Greenpeace, Shell has been wrangling with the U.S. Fish and Wildlife Services since July, when the government agency sent the corporation regulations on how many drills could be used at the same time.
The U.S. Fish and Wildlife services sent Shell a 2013 regulation and reminded the company that oil corporations are not allowed to operate two drilling rigs simultaneously when they are within 15-feet of one another. The agency asserted polar bears, walruses and other animals are at higher risk of fatalities when two rigs are drilling at once. Abiding by these rules slowed the oil corporation’s progress, according to Reuters UK.
“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.,” Shell said in the press release, though the exploration has been suspended for an undetermined amount of time.