Royal Dutch Shell, the largest European oil company, canceled plans to start drilling off the coast of Alaska this summer, saying it remains uncertain about when it will receive the necessary regulatory permits to begin the project. The company's plans to drill in the Beaufort Sea came under scrutiny following the White House's moratorium on deepwater drilling, which was imposed after the Gulf of Mexico oil spill.
Shell (RDS-A) made the Alaska announcement on its fourth-quarter earnings conference call on Thursday. Excluding one-time items, Shell said it earned $4.1 billion in the quarter, missing the consensus estimate of $4.85 billion. The company said it plans to spend $25 billion to $27 billion this year.
Shell has already spent $3.5 billion in preparation of drilling in Alaska. The company announced reduced plans for the Beaufort Sea project following the Gulf spill in an effort to expedite the permitting process. The plans have been pushed back to 2012.
Shell's Beaufort Sea plans were dealt a blow in December when an EPA appeals board remanded Shell's Clean Air Act permits back to the company for revisions, faulting the agency's analysis of the impacts of nitrogen dioxide emissions from drill ships on the Alaska Native communities, according to the New York Times.
Shell said it could be faced with spending another $150 million without even knowing if the EPA and Interior Department would grant it the necessary permits to commence drilling in Alaska.