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  • Alaska Town Faces Hardship After Shell Abandons Arctic Drilling

    Concerns are growing for the future of Unalaska, Alaska businesses after Shell Oil announced it was ending its exploration operations in the Arctic Ocean.

    Now businesses in the area are preparing for any potential economic hit from Shell stopping the project.

    Unalaska Mayor Shirley Marquardt told KUCB radio Sept. 30 that the “community will notice it, our business community will notice it because they utilized a lot of local businesses and hired a lot of folks. So, that’s too bad. I mean it was a real boon.”

    Offshore Systems, Inc. is a fuel and dock facility Shell used in Alaska. Jim Butler, spokesman for OSI, told KUCB the Shell departure left OSI “scratching their heads” and “in the dark” about the economic consequences from the loss of business.

    Diane Shaishnikoff, co-owner of Bering Shai Rock & Gravel, also expressed concerned about the full effect Shell’s decision will have on her company. She told KUCB she lacks “any idea at the moment” about any future impact.

    Despite the concerns over a negative immediate hit for some businesses, others remain less worried.

    Peggy McLaughlin, port director for Dutch Harbor, told KUCB “the bottom line, I don’t see that it’s going to have a huge impact on us. We didn’t budget for it either operationally or in terms of revenue.”

    Marquardt maintained an overall positive outlook for the town of Unalaska.

    “It’s not going to be too huge, I mean, we’re already…we’re an extremely busy port, we’ve been expanding for years, and that’ s not…that’s not going to end,” he said.

    Royal Dutch Shell scrapped its $7 billion project after failing to find any significant amounts of resources and the low cost of oil. (RELATED: How Cheap Oil Derailed Shell’s Arctic Oil Exploration Effort)

    In a press release, Shell stated it “found indications of oil and gas in the Burger J well, but these are not sufficient to warrant further exploration in the Burger prospect.”

    Since 2008, Shell had been trying to get approval for exploration in the Arctic Ocean for oil and natural gas reserves. At that time oil prices were at record-high levels.

    In 2012, Shell received approval from the Obama administration to look for oil in the Arctic, but operations were stopped in 2013 after a drilling rig accident.

    By July 2014 oil prices were collapsing. The price of a barrel of oil fell from above $100 a barrel to nearly $50 a barrel between July 2014 and January 2015.

    Follow Steve Ambrose on Twitter

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