Shell intends to join Alaska's oil industry

Posted: Wednesday, April 09, 2008

ANCHORAGE - As two longtime players in Alaska's oil industry announced landmark plans for a gas pipeline out of the North Slope fields, the president of Shell Oil Co. seemed a bit sheepish about calling a teleconference to discuss his first-ever visit to the region.

"It's hard to compete against the big news," John Hoffmeister said Tuesday, shortly after the announcement from BP and ConocoPhillips.

But after roughly a decade of absence from the Alaska oil patch, the Dutch oil giant has been making headlines of its own. While most production is focused in the Arctic coastal tundra of the North Slope, Shell is trying to revive its presence by taking oil and gas exploration offshore, into the Beaufort, Chukchi and Bering seas.

"This is a totally new frontier in development in Alaska," said Hoffmeister, who met in February with officials from four North Slope communities. "The purpose of my visit was to reassure them that this is a long-term play by Shell."

The company faces strong opposition from environmental groups and many Alaska Natives and fishermen, who worry that undersea drilling or a major spill will cause irreparable harm to polar bears, seals, whales and other marine species.

Although he did not discuss specifics, Hoffmeister said his job was to reassure people that the company is open to balancing social, cultural and environmental issues with oil production. The trip took him to the Inupiat Eskimo communities of Wainwright, Nuiqsit, Point Lay and Barrow, the northernmost town in the U.S.

"It was really about getting to know one another, to understand how a big company like Shell thinks and respects the village life," he said.

Barrow Mayor Michael Stotts said he compliments Hoffmeister on taking the time to visit the tiny communities, 700 miles north of Anchorage.

"We understand that oil makes the world go 'round and it's in everyone's best interest to communicate with the industry," Stotts said. "There is great concern that it would definitely be detrimental to the mammals of the Arctic Ocean and of course many people still depend on the mammals as a food base."

With oil prices spiking in the last few years, Shell has invested about $2.2 billion in leases that give it the right to drill in federal waters around Alaska. Lawsuits have largely halted those plans for now and Hoffmeister said production, if it happens at all, would not begin for at least another 12 years.

Meanwhile, BP and ConocoPhillips announced on Tuesday that they would start developing a $30 billion, 2,000-mile pipeline to move natural gas from the North Slope to an energy hub in Alberta, Canada. The two companies, along with Exxon Mobil Corp., are the major producers on the North Slope.

Hoffmeister said Shell does not have plans to participate in construction of the pipeline, which could be the largest-ever construction project in North America, but the company would be interested in using it to get its products to market.

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