Shell Oil withdraws Beaufort drilling plan

CUTS: Company will redo plans, reduce equipment, wells and exploration areas.

May 6, 2009 

Shell Oil announced Wednesday it has withdrawn its 2007-2009 "plan of exploration" for offshore petroleum along the north coast of Alaska.

The company said it would present pared-down exploration plans to the federal Minerals Management Service in 2010.

The announcement did not come as a surprise. Shell's exploratory drilling was halted in November by panel of the 9th U.S. Circuit Court of Appeals, which concluded that the MMS had improperly given its OK. Judges ordered the agency to reconsider how exploratory drilling would affect wildlife and Inupiat Eskimo subsistence hunting and fishing.

The court vacated its order in March and the matter is pending.

However, Shell in December announced it had canceled exploratory drilling for 2009 while it focused on court challenges and put together a drilling plan for 2010 and 2011.

Shell is one of the world's largest oil companies, but it had largely been absent from Alaska until a few years ago when it began acquiring leases off the state's northern coast. The company spent more than $2 billion last year for leases in federal waters of the Chukchi Sea.

Pete Slaiby, Shell Alaska general manager, said in a statement Wednesday that over the last three years, the company has acquired and analyzed additional seismic data and its objectives have become more focused.

The current exploration plan, set to expire at the end of the year, no longer represents Shell's drilling approach, he said.

The company also responded to North Slope critics, he said.

"We have listened closely to stakeholders and particularly the concerns around the size and pace of exploration plans, and we have adjusted our plans accordingly," Slaiby said.

New plans for 2010 will reflect the current Shell drilling plan for Camden Bay, offshore of the eastern end of the North Slope and the Arctic National Wildlife Refuge.

"Our new Plan of Exploration will reflect a strategy that meets our business objectives of responsible development and also takes into account stakeholder concerns," Slaiby said.

The company will present a one-year drilling program instead of a three-year plan, with one drilling rig instead of two and a goal to drill two wells instead of four.

Plans also call for retrofitting the drilling rig on the vessel Frontier Discoverer with the best available air emission technology, Slaiby said.

"Our new Plan of Exploration makes every effort to address North Slope concerns and we are looking for support on this approach," Slaiby said.

The company in December said its decision not to drill in 2009 meant the loss of 700 jobs directly related to drilling and more than 100 support service jobs on the North Slope. Slaiby on Wednesday again made the point that Shell's reduced program will mean fewer jobs and contracting opportunities.

Brendan Cummings, an attorney for the Center for Biological Diversity, a party in the lawsuit along with the Sierra Club and REDOIL, a coalition of Alaska Native representatives, said the resistance to exploration drilling will remain even if Shell pares its plan to one vessel.

"One ship is one ship too many," he said.

Drilling disrupts bowhead whales, seals, polar bears and other wildlife, he said.

More important, he said, the petroleum industry has not demonstrated it can clean up a crude oil spill in icy ocean conditions.

The Anchorage Daily News/ contributed to this report.

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