ConocoPhillips (COP:US), the largest U.S. independent oil and natural gas producer, put its plans to explore in Alaska’s Chukchi Sea in 2014 on hold because of uncertainties around federal regulations and permitting.
It wouldn’t be prudent to make “significant monetary commitments” to keep the option to drill next year before more is known about regulatory standards, the Houston-based company said in an e-mailed statement today.
In February, Royal Dutch Shell Plc (RDSA) halted plans to drill in Alaska’s Arctic waters this year after one of its rigs ran aground. In March, the Interior Department said The Hague-based company must file detailed plans before it can resume drilling and that rules specific to the Arctic were needed for oil and gas exploration off the coast of Alaska.
ConocoPhillips is “watching what is happening with Shell because that will dictate what needs to be done,” Fadel Gheit, an analyst at Oppenheimer & Co. in New York, said in a phone interview. “Shell basically will set the standard going forward, and basically is going to be the guinea pig.”
ConocoPhillips will reevaluate its Chukchi plans once the requirements are understood, according to the statement.
“We believe this is a reasonable and responsible approach given the huge investments required to operate offshore in the Arctic,” Trond-Erik Johansen, president of ConocoPhillips Alaska, said in the statement.
The company has spent about $650 million net on the project for items such as leases, seismic work, biological studies and well planning through 2012, Daren Beaudo, a ConocoPhillips spokesman, said in a phone interview today.
Independent oil companies such as ConocoPhillips don’t own refineries or a chemical business.
ConocoPhillips rose (COP:US) 1.1 percent to $60.43 at 1:21 p.m. in New York.
To contact the reporter on this story: Edward Klump in Houston at firstname.lastname@example.org
To contact the editor responsible for this story: Susan Warren at email@example.com