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Shell's Alaska Offshore Drilling Plans Abandoned Until Next Year

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Workers leave the arctic oil drilling rig
Workers leave the arctic oil drilling rig "Kulluk," at break time, Friday, May 25, 2012, as it undergoes extensive work at Vigor Shipyards in Seattle.(AP Photo/Ted S. Warren)

AMSTERDAM (AP) — Royal Dutch Shell PLC said Monday it will no longer seek oil off the coast of Alaska this year after suffering several setbacks.

The company, which has so far spent around $4.5 billion to obtain licenses and prepare for exploratory drilling in the Chukchi and Beaufort Seas, said it is scaling back ambitions until next summer after one of its containment systems failed during a test. Earlier, the company delayed drilling due to ice floe movements.

The company said that in the time remaining this season it plans to drill shallow "top holes" for wells that may be further pursued in coming years.

To obtain approval to drill, Shell fought a long struggle against environmental groups, who say seeking oil in the icy waters is too risky. In a statement Monday, Greenpeace claimed "vindication" and called Shell's program a "monumentally reckless gamble."

"Investors must now be asking whether investing such vast sums of money trying to exploit the fragile Arctic is really worth it," said Ben Ayliffe, head of Greenpeace's campaign to stop Shell.

Shell said its decision is evidence of how carefully it is proceeding.

"This exploration program remains critically important to America's energy needs, to the economy and jobs in Alaska, and to Shell," a statement published by the company said.

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