Shell’s Q3 results reflect Arctic hit

Shell rig leaving Dutch Harbor this month. Photo: John Ryan/KUCB.
Shell rig leaving Dutch Harbor this month. Photo: John Ryan/KUCB.

Royal Dutch Shell has announced its quarterly financial results. They’re not good, and Shell’s dry hole in the Chukchi Sea is just one factor.

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“Shell’s current-cost-of-supply earnings for the quarter were a loss of $6 billion,” Shell CFO Simon Henry said at the top of a video summarizing the third quarter. The reported losses for shareholders exceed $7 billion.

For its canceled Arctic project, Shell wrote off $2.6 billion this quarter.  That’s significantly smaller than the write-off Shell took due to lower expectations for oil and gas prices. In all, Shell’s write-offs come to $8 billion.

CEO Ben Van Beurden, in a conference call with reporters, repeated the reasons Shell halted work on its Arctic leases after drilling a single dry hole.

“Due to the high cost and the challenging and unpredictable regulatory environment, we have decided to just cease further exploratory activity offshore Alaska for the foreseeable future,” he said.

The CEO called it “probably the most regulated and high-profile oil province in the world.”

“Of course, we are of the view that the U.S. Government should simplify and modernize the permit processes there if there are any ambition to develop oil and gas in the offshore of Alaska.”

Interior Secretary Sally Jewell has said the government was holding Shell to the highest standards to ensure safety.