Shell expects to drill offshore Alaska this year

Preliminary program in 2012 beset by a wide-range of equipment issues.

By Daniel J. Graeber

THE HAGUE, Netherlands, March 12 (UPI) -- Drilling in the arctic waters of Alaska should proceed this year assuming timely approval from the U.S. federal government, Royal Dutch Shell said Thursday.

Shell's preliminary drilling program in arctic waters offshore Alaska in 2012 was plagued by problems, including a grounded drilling rig, violations of air pollution limits, engine failures on a tow ship and an oil spill containment system damaged during testing.


Shell Chief Executive Ben van Beurden said in an annual report, published Thursday, the Interior Department was reviewing a supplementary environmental impact statement on operations in the Chukchi and Beaufort seas.

"We anticipate that the Department of Interior will continue to work in accordance with their proposed timeline to complete the [impact statement] in sufficient time to allow us to pursue our plans to drill in 2015," he said in the report.

The Port of Seattle signed a two-year lease last month that would let Shell use a terminal as a base of operations for arctic drilling plans. More than 60 people spoke during a public forum to express frustration with the port's decision earlier this week, the Seattle Times reported.


Advocacy groups argue drilling in the region would create substantial risks to the health of safety of people living in the region. Supporters view Shell's planned operation as a source of economic stimulus.

Van Beurden said there were "technical, fiscal, regulatory, political" and other issues that may interfere with frontier development in the arctic.

"Failure to replace proved reserves could result in lower future production, cash flow and earning," he said.

The company devoted about $5 billion and more than eight years of work for its Arctic oil exploration off Alaska's coast in the Chukchi and Beaufort seas.

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