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Page added on September 18, 2014
Exxon halts Arctic oil well drilling on sanctions
Exxon Mobil Corp has halted drilling an offshore oil well in Russia’s remote Arctic just a few days after the United States and European Union barred companies from helping Russia exploit Arctic, deep-water or shale-oil fields, Bloomberg reported on Thursday.
The United States and European Union were planning to stop billions of dollars in oil exploration in Russia by the world’s largest energy companies including Exxon and BP Plc, U.S. government sources told Reuters last week.
Exxon signed a $3.2 billion agreement in 2011 with Russian company Rosneft Oil Co to develop the Arctic. The Texas-based multinational was considered one of the few companies capable of drilling in the harsh, deep waters there.
The two companies were hoping for a major discovery in the Kara Sea.
“We are still assessing the sanctions but will comply with all laws and regulations,” Exxon Mobil spokesman Richard Keil told Reuters. He declined to comment on whether the company had stopped drilling the well.
Rosneft Oil was not immediately available for comment.
The U.S. sanctions, meant to punish Russia for escalating tensions in Ukraine, gave American companies until Sept. 26 to stop all restricted drilling and testing services, the report said. (bloom.bg/1rhh7wf)
The well could have tapped into 9 billion barrels of crude – worth about $885 billion at current prices – that is estimated to be deep under the floor of the Kara Sea, the report said.
Exxon and Seadrill Ltd’s North Atlantic Drilling unit were under pressure to finish or temporarily seal the $700 million well, the Bloomberg report quoted Chris Kettenmann, chief energy strategist at brokerage Prime Executions Inc as saying.
Russia, along with the United States and Saudi Arabia, is one of the world’s top oil producers and is the main energy supplier to Europe. But with conventional oil fields in decline, it needs to move to frontier sources in Siberia and the Arctic to keep the oil flowing.
Exxon’s shares were little changed on the New York Stock Exchange on Thursday.
16 Comments on "Exxon halts Arctic oil well drilling on sanctions"
Perk Earl on Thu, 18th Sep 2014 9:27 pm
As a person who doesn’t think we should be drilling in the Arctic because a spill in frigid waters would be catastrophic, I’m pleased with this development. That being said, I’m bewildered by TPTB rationale here. From their standpoint I would think any oil was good oil, particularly now we are way past the low hanging fruit.
Plantagenet on Thu, 18th Sep 2014 10:06 pm
Obama and the EU have placed sanctions on Russia. In most recent round of sanctions they included the Russian oil companies, resulting in Exxon terminating their activities in the Russia Arctic. TPTB had nothing to do with it—-It was Obama and the EU who took these actions, and they did it to punish Russian for invading Crimea and eastern Ukraine.
Makati1 on Thu, 18th Sep 2014 11:40 pm
Real sanctions would be on the Russian gas companies. But then, the fools in Europe would never stand for that directive from the DC fools. Russia can outlast the Westerner’s. China has it’s back and Russia has a significant store of foreign reserves, not to mention natural resources to trade. Winter is coming…
Davy on Fri, 19th Sep 2014 6:06 am
Knowing what we know here about the near term liquid fuel crunch this may be the last of the Arctic efforts that could have had a chance to get some meaningful production out of the Arctic. We know here the science is pointing to capex compression and the economic oil price threshold for the end user are converging affecting expensive production. We also know and it is well documented that conventional high grade crude is depleting. It is the expensive production and often lower quality production that is filling the gap. The artic is at the limits of this expensive production threshold. Not only is the arctic production in deeper water is it in a hostile cold weather environment with no easy access. These sanction issues and other issues probably will shut in this Arctic potential production long enough for the other converging economic issues to end the feasibility of expensive supply from coming to market. The system is increasingly inelastic on both supply and demand side. We are seeing something like this occurring with oil supply:
Euler’s disk and its finite-time singularity
It is a fact of common experience that if a circular disk (for example, a penny) is spun upon a table, then ultimately it comes to rest quite abruptly, the final stage of motion being characterized by a shudder and a whirring sound of rapidly increasing frequency.
Feemer on Fri, 19th Sep 2014 9:13 am
9 billion barrels is hardly worth it, especially at that depth and in that climate
rockman on Fri, 19th Sep 2014 10:14 am
Feeler – “9 billion barrels is hardly worth it, especially at that depth and in that climate”. Perhaps to you but Russia appears to think otherwise.
Folks shouldn’t expect much of a practical change in the time line. It depends on whether ExxonMobil got the geologic information they needed. Even if the well discovered a significant oil deposit XOM might easily spend 6 – 12 months processing the seismic data and creating the next generation of mapping. And then given the small number of rigs capable of drilling in the Arctic it could take a year or more for a slot to be available. And even if confirmation wells indicate enough reserves to develop it could take 5 to 10 years before production might begin.
That potential 9 billion bbl’s could be worth a lot more 10+ years from now… to Russia, the EU and XOM.
Northwest Resident on Fri, 19th Sep 2014 10:21 am
As we creep closer and closer to the inevitable end of the oil age and BAU, we’re probably going to be hearing a lot more about all these wonderful sources of oil that promise to keep BAU going forever — places like the deepwater arctic, deepwater fracking in the North Sea, fracking in Africa and Argentina — really terrific sources of oil, if you know what I mean. It is called DELUSIONAL. They’ve got to keep the delusion and the illusion going up to the point where they are no longer needed anymore. After that, stark harsh cold cruel reality baby!!
Perk Earl on Fri, 19th Sep 2014 1:23 pm
“They’ve got to keep the delusion and the illusion going up to the point where they are no longer needed anymore.”
Delusion & illusion is right. I mean the frigid Arctic?! No, this isn’t desperate to keep BAU going – ha!
As a side note, I noticed no one in the oil bus. ever answered the question as to how oil from a spill would be dealt with in waters in which the oil doesn’t break down like it does in warmer waters. I suppose we are expected to ‘hope’ oil doesn’t get spilled and ‘when’ it does they’ll act real surprised it isn’t responding to the usual destructive to life attempts to disperse and break down. “We did not anticipate the Walrus, polar bear, fish, krill, sea birds and seals die off, needing to test alternative methods, possibly adjusting our clean-up response in the future.” Oil Co. X
At least in the Gulf volunteers could line the coastal areas to help clean birds, but in the Arctic who is going to show up?
Davy on Fri, 19th Sep 2014 1:38 pm
Perk, Exon Valdez is close and we know how bad that spill was long term and the damage to the ecosystem. We all know about the BP F**k ups on the North slope. But of course that is on land but the effort to contain them shows how hard it is on men and machines in frigid conditions.
rockman on Fri, 19th Sep 2014 3:57 pm
Earl – “, I noticed no one in the oil bus. ever answered the question as to how oil from a spill would be dealt with…” I’ll be glad to answer. There will be little opportunity to recover any significant amount of oil. What doesn’t sink to the bottom will be dispersed by the prevailing currents. Some will certainly wash ashore somewhere but probably in remote areas where limited logistics won’t allow much clean up in a timely manner. Wildlife will no doubt be impacted.
There’s really not much unknown about the potential impact. Just as there isn’t much unknown about the end result of a commercial airliner losing full power and dropping like a rock from 35,000′.
Life it full of risks. The only question is what risks society is willing to accept. That call will never be 100%. Planes crash and wells blow out. That potential might be reduced to a low level but can never be reduced to zero.
Perk Earl on Fri, 19th Sep 2014 7:17 pm
“There will be little opportunity to recover any significant amount of oil. What doesn’t sink to the bottom will be dispersed by the prevailing currents. Some will certainly wash ashore somewhere but probably in remote areas where limited logistics won’t allow much clean up in a timely manner. Wildlife will no doubt be impacted.”
Thanks for clarifying the unfortunate truth, Rockman. No wonder Greenpeace tried to stop that Russian rig, and no wonder the response was to throw them in the clinker. Couldn’t give an inch or drilling might get curtailed.
This is playing Russian Roulette.
Makati1 on Fri, 19th Sep 2014 7:51 pm
As we kill our oxygen suppliers (forests and sea life) and our food sources (depleted, poisoned soil, water, GMOs), we still have $3 gasoline … let’s keep on drillin’ baby!
Bob Owens on Sat, 20th Sep 2014 8:42 am
We cannot change what our Nation States are doing. We can only change ourselves. I urge everyone to take some action, however small, to make things better. Going Interstate cruising to see Mom? Set the speed control on 65 instead of 70. Better yet, call Mom on Skype and send her some flowers for her birthday. There, don’t you feel better? You have just done more for the World than all our Governments.
Davy on Sat, 20th Sep 2014 9:12 am
Yeap, Bob, I call it relative sacrifice. We know we are not all created equal, live in different environments, and come from different classes. What is not needed is a one prescription for everyone but an attitude from everyone to do less and do less with less. Forget “more with less” because this is just an offshoot of Jevons Paradox. The last low hanging fruit is attitude and lifestyle changes. These attitude and lifestyle changes are different for the third world and rich world. The rich need to lower consumption and the third world must limit population growth by whatever means “period”. Developing countries like China and India must do both. Since TPTB refuse to admit there are immediate risks of system collapse we will have to just hope for a bottom up effort of a critical mass of people. We are seeing a coalescing of attitudes by many at the bottom but I fear it is too little too late. The top down is triaging global society with parasitic wealth transfer and elimination of whole segments from the modern world. This could be a consumption lowering devise except the 1%ers are increasing their consumption not deceasing it.
dissident on Sat, 20th Sep 2014 1:48 pm
Like this is supposed to hurt Russia. Russia will still be pumping more than it needs until sometime after 2030 when peak production has worked its way. This little tantrum will just reduce the amount of oil on the world market in the near future. Good job, pinheads, for making sure the prices stay high.
Davy on Sat, 20th Sep 2014 2:11 pm
Diss, just like the worn out phrase in the US “we are addicted to oil”. Russia is in the same unfortunate situation as the US but as a net producer not consumer. Both countries are feeling the effect of less benefit from oil because of the deteriorating dynamic of economy/energy. Russia needs ever more revenue to support its various expansions in the areas of economics, military, and geopolitically. This needed expansion at a time when their conventional oil production is falling and new source opportunities are stagnating. Same song and dance just a different tune.