Updated July 10, 2012, 1:55 p.m. ET
By ANGEL GONZALEZ And ALEXIS FLYNN
BP RDSB.LN +1.12% Plc’s and Royal Dutch Shell RDSB.LN +1.12% Plc’s plans to develop offshore oil in Alaska’s Arctic frontier are facing setbacks, as they meet with stricter scrutiny and rising costs stemming from the 2010 Gulf of Mexico oil spill.
London-based BP said Tuesday it is shelving its Liberty offshore drilling project in Beaufort Sea, after deciding that its current plan isn’t up to the standards it promised to follow after the Deepwater Horizon catastrophe—and revamping its drilling rig to meet those standards would be too costly.