Shell’s giving up drilling in the Arctic Ocean. Now what?

On Sept. 28, 2015, Shell captured national attention when it announced that the exploratory well it drilled in hopes of extracting the first barrels of oil from Alaska’s Chukchi Sea was a bust. The company didn’t strike enough oil to make further exploration economically viable. Effective immediately, it’s backing out of the Arctic Ocean “for the foreseeable future.”

Environmentalists who spent the summer dangling off bridges and forming kayak blockades to protest Shell’s activities were overjoyed. “Here’s hoping Shell leaves the Arctic forever,” cheered Miyoko Sakashita, oceans program director for the Center for Biological Diversity.

But even as green groups urge the oil industry to abandon its Arctic dreams, some analysts are predicting the world’s growing population will require an additional 10 million barrels of oil a day between 2030 and 2040. And Alaska’s politicians are determined to get a piece of the pie: Alaska’s Arctic is estimated to hold the largest unexplored reserves in North America, and the state derives 90 percent of its revenue from oil and gas.

In recent years, production in the Alaskan Arctic has fallen at a rate of 5 percent a year. If it continues to decline and the price of oil stays low, the U.S. Energy Information Administration predicts that the Trans-Alaska Pipeline could be decommissioned as early as 2026. And if that happens, existing wells at Prudhoe Bay would be plugged and abandoned, sending the state’s economy into a death spiral. “It’s a huge disappointment,” Gov. Bill Walker said, of Shell’s announcement. “A really big disappointment.”

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