Royal Dutch Shell plc (NYSE:RDS.A) (NYSE:RDS.B) has abandoned its half-pursued Arctic drilling plans for 2013. The European oil heavyweight has caved in to pressure from all angles; most specifically regulators, ardent environmentalists and politicians.

shell logo

Although Royal Dutch Shell plc (NYSE:RDS.A) (NYSE:RDS.B) has abandoned its plans for the year, company CEO, Peter Voser, maintains that the halt is temporary. Oil drilling off the Alaskan coast has, for a long time now, been stalked by prolonged criticism for environmentalists. The CEO also says that drilling in the Beaufort and Chukchi seas, both of which are off the Alaskan coast, is a long term effort.

Ardent environmentalists and Alaskan tribes have persistently urged courts to stop Shell from drilling in the Beaufort and Chukchi seas. In the process, Shell has had to fend off more than a dozen different lawsuits. The environmentalists and Alaskan tribes say oil drilling negatively affects the wildlife habitat in the area.

In addition to the pressure from environmental buffs, Shell has had to deal with the unforgiving wrath of mother nature. Stormy weather has been a key barrier in the Arctic drilling efforts. It is noted that the company barely drilled for a day before sea ice encroached its rig, forcing it to move the rig away. In addition, there was notable damage to the containment dome during testing – damage big enough to compel the company to abandon its drilling hopes.

In the U.S. corridors of power, a section of politicians continue to level opposition against Shell’s Arctic sea drilling. Barely last week, a representative from Massachusetts revealed that Shell’s drilling ship, Noble Discoverer, had received a total of 16 citations from the U.S Coast Guard. In light of this, Shell has decided that the Noble Discoverer will be returned to Asia for upgrades.

Amid all the negatives, U.S senator from Alaska, Lisa Murkowski, has stepped forward in support of Shell. She remarks that the Shell’s Arctic drilling plans will in the end benefit the country.

A rough 2013 ahead

2013 signals a dark year for Royal Dutch Shell plc (NYSE:RDS.A) (NYSE:RDS.B). The onset of the year was marked with lower-than-expected earnings. As we reported, the company’s profit for fiscal 2012 Q4, despite increasing 15 percent year-over-year to come in at $5.6 billion, missed analysts estimates. The consensus had been pegged at $6.3 billion.

As of this writing, Royal Dutch Shell plc (NYSE:RDS.A) (NYSE:RDS.B) has spent close to $4.5 billion in its Arctic drilling efforts. The abandonment of the drilling plans, coupled with its disappointing earnings, suggest that 2013 will be a rough year for the oil heavyweight.