US gives approval to Shell's Arctic exploration bid

Oil major Shell has received encouraging news in its bid to tap the US Arctic for hydrocarbons, after the US government approved its holdings off Alaska.

Late on Tuesday, the US Interior Department upheld a 2008 lease sale to Shell in the Chukchi Sea off Alaska. Dispute arose, after Shell lost control of the Kulluk oil rig in 2012, which eventually ran aground. The company has so far spent over £3bn without any success.

The company has since faced severe criticism from environmental groups fearing an oil spill in harsh climes.

However, explaining the decision, Interior Secretary Sally Jewell said: “The Arctic is an important component of the [Obama] Administration's national energy strategy, and we remain committed to taking a thoughtful and balanced approach to oil and gas leasing and exploration offshore Alaska.”

Reports suggest Shell had already moved rigs to Alaska in anticipation of a positive outcome.

Moving on to the next stage, US Bureau of Ocean Energy Management will now consider Shell's exploration plan, and provide an environmental impact assessment on it. The consideration process is likely to last at least 30 days.

In response, Shell said: “The decision clears the way for the Bureau of Ocean and Energy Management to conclude its review and make a decision on our Revised Chukchi Sea Exploration Plan. The execution of that plan remains contingent on achieving the necessary permits, legal certainty and our own determination that we are prepared to explore safely and responsibly.”