Shell Terminates Contract for Polar Pioneer Drilling Rig

Shell’s arctic drilling rig Polar Pioneer. Photo: Shell Alaska

Royal Dutch Shell has terminated its contract for use of Transocean’s Polar Pioneer drilling rig following the the oil major’s decision to abandon its drilling plans offshore Alaska.

Transocean, a Switzerland-based offshore drilling contractor, made the announcement Monday, saying Shell has elected to terminate the contract for the harsh environment semi-submersible prior to its expiration in July 2017. Transocean says it expects to be compensated for the early termination through a lump-sum payment that includes adjustments for reduced operating costs and demobilization to Norway.

The Polar Pioneer was one of two harsh environment drilling rigs Shell contracted to carry out drilling operations in the Chukchi and Beaufort Seas. But exploratory drilling in Chukchi Sea this past summer failed to find enough recoverable oil, forcing Shell to announce that it was abandoning its Alaskan Arctic drilling ambitions all together after spending about $7 billion. 

The Polar Pioneer received some unwanted media attention leading up to this summer’s drilling program when it was boarded by Greenpeace activists as it sailed across the Pacific Ocean and later as it was met by protests in Seattle. 

Shell has also terminated the contract for Noble Corporation’s Noble Discoverer drillship ahead of schedule.

Last week, Shell announced that it was reducing its 2016 spending by about $2 billion as it weathers the collapse in oil prices and prepares for its acquisition of BG Group.

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