Royal Dutch Shell returns, hopes to be major player in Alaska

Posted: Wednesday, August 24, 2005

ANCHORAGE - Royal Dutch Shell is back in Alaska.

After leaving the state in 1998, the company has returned and hopes to join BP, ConocoPhillips and ExxonMobil as a major player in Alaska.

Shell this year made its intentions clear by spending more than $44 million for 84 offshore leases in the Beaufort Sea. Company officials say that is just the beginning.

"Alaska is a great and vast land. It is for people who think big ... and that's what we're doing," said Chandler Wilhelm, the company's Alaska Exploration manager, at an open house Tuesday at Shell's new offices in midtown Anchorage.

The offices are staffed, for now, with just two people, Tom Homza, a longtime Alaska geologist serving as office manager, and Edna Beuhler, also of Alaska, who will serve as office coordinator.

For the time being, Shell's technical staff will remain at Shell Exploration & Production Co. in Houston. As Shell's presence in Alaska grows, technical people from Houston are expected to relocate, officials said.

While it is too early to project how many people the company could eventually employ in Alaska, Shell executives say they expect to have a large presence with the primary focus being offshore exploration and development.

Annell Bay, Shell's regional vice president for Exploration in the Americas, said the company is committed to growing globally. Shell is back in Alaska because of its large resource potential, she said.

"We are really excited about the potential for Alaska," Bay said. "We intend to be here for the long run."

After more than 30 years in Alaska, Shell sold its Cook Inlet oil and gas assets in 1998. The company, known as Shell Oil Co., got its start in Alaska in the 1950s with investments in Southeast Alaska and the Alaska Peninsula.

The Minerals Management Service estimates that about 7 billion barrels of oil and 32 trillion cubic feet of gas can be recovered from under the Beaufort Sea along Alaska's northern Arctic coastline.

Shell purchased the Beaufort Sea offshore leases in March based on the company's geological analysis, as well as offshore experience gained at Russia's Sakhalin Island, where the company is embarking on a $20 billion oil and gas project, Wilhelm said.

Drilling in the Beaufort Sea would begin no sooner than 2007, he said.

"We think there is some potential for some significant oil fields," he said.

Technology developed in the past 20 years is making the prospect of offshore exploration much more attractive, Wilhelm said.

"We wouldn't have invested in Alaska if we didn't believe it could be developed safely," he said.

The company's decision to go offshore is buoyed by the experience BP has had with its Northstar oil field. The offshore field began production in October 2001 and is averaging more than 70,000 barrels of oil a day. There have been no significant spills and the field is realizing its full potential, said BP spokesman Daren J. Beaudo.

"The field has been producing well," he said.

Royal Dutch Shell is incorporated in England and Wales and headquartered in the Hague, Netherlands. Shell companies have operations in 145 countries.



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