Shell loses Arctic drilling appeal

Suzie Neuwirth
ROYAL Dutch Shell could be forced to delay its drilling in the Arctic, after a US appeals court ruled that offshore oil permits were awarded without considering the full environmental risks.

The FTSE 100 oil major said last month that it was planning to resume exploratory drilling in the Chukchi Sea near Alaska this summer. “We are reviewing the opinion,” a Shell spokesperson told City A.M. yesterday.

The 9th US Circuit Court of Appeals ruled that the Department of the Interior in the US had violated the law when it sold offshore oil and gas leases in the Chukchi Sea six years ago, to companies including Shell.

Shell started preliminary drilling on one Chukchi well in 2012, but after experiencing equipment failures and accidents, the company stopped drilling there last year. Environmental groups and Native Alaska tribes have been disputing the exploration leases, saying they should never have been granted six years ago because the federal government failed to consider the full scale of the project and associated risks.

The appeals court’s decision is the latest bad news to blight Shell, which issued a profit warning last week. It is blaming current oil and gas prices and the challenging European refining market for weighing down on earnings.

Shell continues to offer high dividends and share buybacks to soothe investors from the sting of a number of disappointing updates. It is embarking on a multi-billion pound divestment plan this year, as new chief executive Ben van Beurden looks to turn around the company. Shares rose 0.17 per cent.