Shell’s departure from the Arctic is a very significant event in the global energy picture, writes Energy Post editor-in-chief Karel Beckman. It is another sign that the End of the Oil Age is in sight.

After Volkswagen, a second major European company had to face acute embarrassment this week. Shell did not commit fraud, but they sure made a billion-dollar blooper in the Arctic. Yes, taking risks is part of what business is about, and sometimes wells turn up dry, but there is a lot more to the story than that.

Clearly the disappointing results of a single exploratory well (“Burger J”) in a single basin can’t have been sufficient reason for Shell to suddenly give up on its Arctic venture altogether. “For the foreseeable future”, as the company put it, i.e. indefinitely. In fact, the company did give two additional reasons: “the high costs associated with the project, and the challenging and unpredictable federal regulatory environment in offshore Alaska”.

But neither of these can have come as a surprise. Critics have been warning for a long time that the costs of Alaskan drilling are prohibitive, and the “regulatory environment” in this part of the world will inevitably be unpredictable.

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