Shell drops plans for Beaufort Sea drilling in 2011

Paula Dittrick
OGJ Senior Staff Writer

HOUSTON, Feb. 7 -- Shell Alaska dropped its plans to drill in the Beaufort Sea this year, Shell Alaska Vice-Pres. Peter Slaiby said during a Feb. 3 news conference in Anchorage. The announcement came after a ruling last month revoked federal clean air permits to allow the drilling.

A federal environmental appeals board in January ruled the US Environmental Protection Agency needs to do more extensive analysis of nitrogen dioxide emissions from vessels involved in drilling operations. The ruling was based upon appeals from Alaska Native and conservation groups.

Slaiby said Shell’s decision to delay Beaufort exploratory drilling stemmed from “continuous regulatory delays.” Royal Dutch Shell PLC has worked for 5 years and invested more than $50 million pursuing air permits to drill in Arctic waters off Alaska, he said.

Shell intends to work closely with the EPA to identify an improved process for delivering air permits for 2012, Slaiby said.

“Shell has dedicated significant time and resources to commencing a world-class, environmentally responsible exploration program for Alaska, and the loss of another drilling season is extremely disappointing,” he said.

Previously, Shell Alaska had planned exploratory drilling during 2010 in both the Chukchi and Beaufort seas, but those plans were put on hold following the oil spill in the Gulf of Mexico from the deepwater Macondo well operated by BP PLC.

Sen. Lisa Murkowski (R-Alas.) issued a statement after Shell’s announcement. Murkowski said the government’s decision could “result in all of us paying more for gasoline—not to mention the loss of jobs and revenue that responsible development brings.”

“We talk a lot about the economy, but rarely do our actions match our rhetoric,” Murkowski said. “That’s unfortunate.”

Shell Offshore Inc. last year submitted an application to the US Bureau of Ocean Energy Management, Regulation, and Enforcement for a permit to drill an exploration well in the Beaufort Sea in 2011. The application was for the shallow waters of Camden Bay (OGJ Online, Oct. 7, 2010).

Contact Paula Dittrick at paulad@ogjonline.com.

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