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Royal Dutch Shell calls time in the Arctic for another year

Royal Dutch Shell has called time on its troubled Arctic exploration programme for another year after a series of mishaps in 2012 scuppered its plans to drill for oil in the region this summer.

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By 8:20PM GMT 27 Feb 2013

The controversial campaign has so far cost Shell about $5bn (£3.3bn) over seven years. The company has faced a string of delays that have as yet prevented it from drilling into potentially oil-bearing rocks.

The energy giant concluded its 2012 programme in October by saying it looked forward to “picking up where we left off when the sea ice retreats next summer”, but the plans for 2013 were thrown into doubt on New Year’s Eve, when Shell’s Kulluk rig ran aground in a storm off Alaska and was damaged.

However less than a month ago chief executive Peter Voser said Arctic drilling activity was still included within Shell’s exploration programme for the year.

In a statement on Wednesday night, Shell said it would “pause its exploration drilling activity for 2013 in Alaska’s Beaufort and Chukchi Seas to prepare equipment and plans for a resumption of activity at a later stage”. It did not specify a likely resumption date.

As well as damage to the Kulluk, Shell faced another setback when the US Coast Guard found regulatory violations, including fire hazards, on its other Arctic drilling rig, the Noble Discoverer. These have been passed to the US Department of Justice to consider possible penalties.

Shell’s entire 2012 campaign, which also experienced other equipment failures, is subject to a high-level review by the US Interior Department, which has said its findings will influence future permitting decisions. The company’s 10-year Arctic exploration leases will start to come up for renewal in 2015.

Shell said its drilling in 2012 was “completed safely, with no serious injuries or environmental impact” and played down the significance of the delay, insisting it would proceed at a “measured and responsible pace”. The Arctic remained “an area with high potential for Shell over the long term” and it was “committed to drill there again in the future”.

Ben Ayliffe, head of Greenpeace’s Arctic campaign, said Shell’s “repeated blunders” showed it was “incapable of operating safely in the Arctic”.

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