Shell Oil deciding on Alaska offshore drilling

Company hopes to drill two or three wells next year

Posted: Friday, November 06, 2009

ANCHORAGE - Shell Oil says it will decide soon on drilling plans for oil and gas in the Beaufort and Chukchi seas next summer.

Peter Slaiby, vice president of Shell Alaska, told The Anchorage Daily News on Wednesday that the company hopes to drill two to three wells next year rather than the dozen-plus wells originally planned.

He said his company listened to critics of its previous drilling plans in the Arctic and spent more than $25 million to tighten the air pollution controls on its drill ship, the Frontier Discovery. The company spent $2 billion two years ago for leases.

Scientists say Alaska's arctic waters could hide a massive storehouse for oil and natural gas, estimated to nearly rival the onshore discoveries of the North Slope.

Environmentalists and North Slope governments successfully sued the past two summers to block drilling plans, and more litigation is likely on the revised plans.

But until it is clear that drilling plans have been revised enough to withstand court scrutiny, Shell executives said their major challenge lies in obtaining a pair of federal air pollution permits for drilling in the Beaufort and Chuckchi seas.

Slaiby said putting the air permits together has been a lengthy, complex process.

Just as the distant arctic seas are a frontier for oil companies, those permits are a new frontier for the U.S. Environmental Protection Agency. The agency has issued just one such permit before - for Shell's earlier Beaufort Sea drilling proposal - and the agency's internal appeals board struck it down.

North Slope Borough officials have asked for big changes to a draft version of Shell's air permit.

In a joint letter with other North Slope organizations, the borough told the EPA that it should limit Shell's emissions of greenhouse gases that contribute to climate change and other air pollutants.

Shell's emissions would be equivalent to the exhaust of millions of cars, they said, citing EPA's own calculations.

EPA officials have said they plan to issue decisions on the permits by the end of the year.

Meanwhile, Slaiby said Shell will decide in December or January whether to launch its fleet of exploration vessels - including a drill ship, icebreakers and other vessels - into the Arctic.

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