Royal Dutch Shell has invested more than $3 billion in its Alaskan offshore exploration program, without being allowed to drill a single well, according to Pete Slaiby, Shell's vice president for Alaska. His speech in Anchorage on Aug. 14 was reported by Tim Bradner in the Alaska Journal of Commerce. Shell Alaska now holds 137 leases in the Beaufort Sea, after relinquishing 30 leases last year. The company invested billions preparing to drill exploration wells on the Beaufort Sea leases, focusing initially on drilling the Sivulliq prospect in western Camden Bay, in water 90-110 ft deep. Shell Offshore Inc. renovated and upgraded two arctic-class mobile drilling units to use in the Beaufort drilling program: the Shell Kulluk conical platform and the Frontier Discoverer drillship. In October 2007, Shell EP Offshore Ventures Ltd. announced that it was also developing a new Arctic drillship called the "Bully Rig" in a joint venture with Frontier Drillships Ltd., a subsidiary of Frontier Drilling. The new ship is 25% smaller and 60% lighter than comparable capacity drillships, capable of drilling to 12,000 ft while maneuvering in water as shallow as 50 ft. In February 2007, the MMS approved Shell's plan to drill as many as four wells later that year. But the company missed the 2007 and 2008 drilling windows entirely, due to continued court challenges. Environmental groups voiced concern over the potential threat of drilling operations to migrating bowhead whales, a threatened species. Several lawsuits went to the US Court of Appeals for the Ninth Circuit. Among the litigants were the Alaska Eskimo Whaling Commission and the San Francisco-based Center for Biological Diversity, In November 2008, the Ninth Circuit ruled that the MMS didn’t properly consider risks to the environment and disruptions to the traditional hunting of local inhabitants when it approved Shell’s plans to drill at Sivulliq. In May 2009, Shell told the US Minerals Management Service it was withdrawing its original 2007-09 exploration plan for the Beaufort Sea, and would file a drilling plan for 2010 that was much reduced in scope. This plan includes drilling two wells during the open water drilling season in 2010. Earlier this week, on Oct. 19, the MMS conditionally approved Shell's drilling plan for the Beaufort Sea. Shell will drill with the M/V Frontier Discoverer and one ice-tending vessel, on leases that are 16 and 23 miles north of Point Thompson, Alaska. Drilling will take place from July-October, with a break in August to allow Kaktovik and Nuiqsut villagers to hunt (endangered) bowhead whales. How ironic that environmentalist groups used the whale's threatened status to stop exploration work these past few years. On Oct. 21, the New York Times published a letter dated Oct. 16, "Drilling in Alaska," from Marvin Odum, president of Shell Oil Co. As much as I generally admire that paper's editorial decisions, I think this was held too long, given the Ninth Circuit ruling two days before publication. Odum wrote in (timely) response to an editorial published Oct. 14 ("A Clearer Look at Drilling") and he says, "...bringing new energy sources to market is held up by unnecessary litigation and unreasonable federal permitting delays." How true.
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