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Shell Alters Alaska Drilling Plans

2012-09-03

Shell has revised its drilling plans for offshore Alaska due to the presence of ice and ongoing certification efforts for its oil spill containment system.

Shell CEO Peter Voser told analysts Thursday that the company now plans to two drill wells offshore Alaska this year and to prepare for additional drilling next year.

"We have already applied for more so that we can actually continue next year to drill," Voser commented during the company's earnings call on Thursday.

The normal drilling season would start have started in mid-July offshore Alaska, Voser said.

"This year, it's later, so we expect the ice to be gone most probably within the next two weeks."

The ice this year is the thickest seen in the last decade, Voser noted.

Shell is working together with the U.S. Coast Guard to complete the certification of the oil spill containment system. The system is the first of its kind worldwide, "which stretches also the Coast Guard a little bit from the permitting point of view."

Shell's drilling activity in the Beaufort Sea also will be delayed to allow local communities to conduct whale hunting, Voser said.

Besides a limited window of time due to ice, the company has faced a number of challenges in pursuing its Arctic exploration drilling plans offshore Alaska, including opposition from environmental groups and completion of construction on the oil spill containment system Arctic Challenger.

Dow Jones reported in July 25 that Shell has sought permissions from the Obama administration to get permission for an early start on planned wells in the Arctic Ocean. Shell can't begin drilling in the Chukchi and Beaufort Seas until the vessel is in place.

A drillship leased by Shell for its Arctic exploration plans also drifted off its moorings while anchored offshore Alaska, narrowly missing the shore, according to a July 16 Dow Jones newswires report.