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Shell's Arctic dreams postponed another year

By Matt Smith, CNN
updated 4:51 PM EST, Thu January 30, 2014
STORY HIGHLIGHTS
  • Shell says it lacks "a clear path forward" for drilling off Alaska
  • A court ruling last week set back the project
  • Shell began drilling in 2012 but skipped 2013 after several snags
  • Environmentalists cheered Thursday's ruling

(CNN) -- Oil giant Royal Dutch Shell has canceled plans to drill in the Arctic waters off Alaska this year after a federal court ruling put the company's multibillion-dollar project on hold, the company said Thursday.

It's the second year Shell has postponed its push to drill in the Chukchi Sea, where it began exploratory drilling in 2012. The effort caused widespread concern among environmentalists and native Alaskan communities, who have taken the company and the U.S. government to court to stop it.

"The lack of a clear path forward and an associated timeline makes it impossible to commit the resources needed to explore safely in 2014," Shell spokesman Curtis Smith said.

A federal appeals court ruled last week that federal regulators used "an unrealistically low estimate" of the amount of oil Shell might be able to produce when calculating the project's impact on the Arctic environment.

Environmental groups cheered the company's decision to sit out the year.

"Arctic offshore drilling is fraught with dangers that defy rational economic development," Margaret Williams, the head of the World Wildlife Fund's Arctic programs, said in a written statement. "Shell's decision to abandon efforts to drill in this remote and extreme environment in 2014 means that Alaskan communities and wildlife will be able to go at least another year without the added threat of spills from exploratory drilling."

Shell began exploration in summer 2012. But it skipped 2013 after some high-profile snags, including the grounding of a drill barge that was being towed back to the continental U.S. at the end of the 2012 season.

Smith said the company is frustrated by the obstacles it has faced but will continue working with the Department of the Interior while it reviews its options.

"Every year we are delayed from understanding the oil and gas resources under the Chukchi Sea only further delays the potential creation of tens of thousands of jobs, billions of dollars in tax revenue and much-needed new oil for the Trans-Alaska Pipeline," he said.

The shrinking of Arctic sea ice, which hit record summer lows in 2012, has created new opportunities for energy exploration in the region. Climate researchers say that decrease is a symptom of a warming climate, caused largely by the combustion of carbon-rich fossil fuels like oil -- a conclusion that's politically controversial but accepted as fact by most scientists.

Shell's plans also were delayed by the 2010 Deepwater Horizon disaster, which killed 11 rig workers and unleashed an undersea gusher in the Gulf of Mexico that took three months to cap. The company says it's working at far less depth and lower pressures than those involved in that accident.

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