The Arctic was once the most exciting and promising frontier for oil exploration, but it was a very long time ago.
Now that another oil major has left the forbidding region with little but a big bill, count on another very long time passing before the industry returns.
There have been spurts of optimism since the 1980s that the swashbuckling adventures of the past would enjoy a rebirth in the Far North of the United States and Canada. Something always gets in the way, usually a cost-benefit analysis after a shift in markets.
That happened again this past week, when Royal Dutch Shell, hounded by environmentalists and hit by disappointing drilling, scrapped its plans for the Chukchi Sea after spending $7-billion (U.S.) over several years. It said it would not resume activities offshore Alaska for the "foreseeable future."
Now, every oil company that had designs on opening up a new source of production in U.S. and Canadian Arctic waters has backed off, despite the attraction of huge reserves. Don't expect the industry to return in any serious manner for another decade or two.
With costs that run into the billions of dollars just to get to the end of the first well, it could only be in a serious manner.
Shell's Alaskan adventures in the Chukchi, north of the Bering Strait, have been eventful.
Three years ago, its drilling rig ran aground off Alaska, prompting the company to take a hiatus from exploration in the region.
It then went through an arduous regulatory process with U.S. authorities before being granted final approval in the summer, all the while facing an onslaught of protest from environmental groups led by Greenpeace.
In the end, Shell said its Burger J exploration well failed to give forth commercial oil quantities, and it decided to pull the plug on the program and take a charge of as much as $4.1-billion.
Taking pricey risks has been part and parcel of the oil game since the industry's beginnings. But this time, the planning coincided with oil markets entering the second year of a deep price trough and after other players had already served notice that it is not the time to blow the budget in frigid climes.
Chevron made that decision almost a year ago. It shelved plans for a deep-water exploration well in Canada's Beaufort Sea, blaming the oil-price drop. It had applied to the National Energy Board for an alternative to the accepted practice of ensuring that it could drill a same-season relief well in the event of a blowout.
In June, Imperial Oil, Exxon Mobil and BP PLC followed suit, saying they needed more time to study their jointly held leases, 175 kilometres north of Tuktoyaktuk, NWT. The acreage lies under as much as 1,500 metres of water. Imperial is in talks with the board to extend the licences to 16 years.
It's hard to fathom such an effort when advances in drilling and completion technology have unlocked huge shale-oil reserves in dry, flat, easy-to-get-to places such as North Dakota and Texas at a small fraction of the cost. That has shifted that focus from Arctic oil much like the shale revolution did with northern natural gas a few years earlier.
Meanwhile, many forecasters see oil prices under pressure for at least another couple of years, keeping the pressure on budgets.
It was amid fears of oil shortages and government subsidy that companies such as Dome Petroleum, Petro-Canada and Panarctic Oils drilled more than 400 wells in Canada's Arctic from the 1960s through the 1980s, finding 1.7 trillion barrels of oil and 31 trillion cubic feet of gas. More than 90 were drilled in the Beaufort, none under more than 68 metres of water.
The last well drilled in the Beaufort was Devon Energy's Paktoa C-60 in 2005 and 2006. Devon found 240 million barrels of oil, but has not developed it. In fact, at the time it was looking for gas that could be transported in the Mackenzie Valley pipeline, a project that is now all but dead.
Shelving the offshore activity is another blow to officials in the Northwest Territories, who have long dreamed of energy riches and who want to build up an Arctic base to supply the industry as it embarks on the next offshore era.
The world's largest oil companies have shown that the dreaming will continue for a long time to come.
Jeffrey Jones