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Shell : Burger J Well To Be Sealed And Abandoned

European oil giant Royal Dutch Shell Plc. (RDS-B, RDSB.L, RDSA.L,RDS-A), in its update on the Burger J exploration well located in Alaska's Chukchi Sea, said that it has found indications of oil and gas in the Burger J well, but these are not sufficient to warrant further exploration in the Burger prospect. The well will be sealed and abandoned in accordance with U.S. regulations.

The Burger J well is approximately 150 miles from Barrow, Alaska, in about 150 feet of water. Shell safely drilled the well to a total depth of 6800 feet this summer in a basin that demonstrates many of the key attributes of a major petroleum basin. For an area equivalent to half the size of the Gulf of Mexico, this basin remains substantially under-explored.

Shell said that it continues to see important exploration potential in the basin, and the area is likely to ultimately be of strategic importance to Alaska and the US. However, it was a clearly disappointing exploration outcome for this part of the basin.

Shell noted that it will now cease further exploration activity in offshore Alaska for the foreseeable future. This decision reflects both the Burger J well result, the high costs associated with the project, and the challenging and unpredictable federal regulatory environment in offshore Alaska.

The company expects to take financial charges as a result of this announcement. The balance sheet carrying value of Shell's Alaska position is approximately $3.0 billion, with approximately a further $1.1 billion of future contractual commitments. An update will be provided with the third quarter 2015 results.

Shell holds a 100% working interest in 275 Outer Continental Shelf blocks in the Chukchi Sea.

Operations will continue to safely de-mobilize people and equipment from the Chukchi Sea, the company said.

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