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October 31, 2013 --- Vol. 19, No. 67October 2013

Shell to file new exploration plan; may drill in Chukchi in 2014

Shell expects to file a new Arctic Alaska exploration plan shortly, perhaps in the next couple of weeks, Simon Henry, the company’s chief financial officer, told media this morning after the company’s third quarter earnings results announcement. The company plans to initially focus on the Chukchi Sea, possibly restarting its drilling program in 2014, depending on whether it can obtain the necessary permits in time, Henry said.

Henry said that, to be able to drill in 2014, it will be necessary to mobilize a substantial drilling and support fleet and that all of the vessels in that fleet will require permitting prior to the drilling season.

He said that the company has not yet decided on the future of the Kulluk, the company’s floating drilling platform that was damaged during a grounding accident at the end of 2012. It may not be cost effective to repair the Kulluk, Henry said. He said that the extremely shallow water of the Beaufort Sea requires a specialized drilling system, such as the Kulluk — the loss of the Kulluk has, therefore, resulted in Shell placing its Beaufort Sea program on hold for the time being.

“Our focus will be very much on the Chukchi, which is by far the biggest prize,” Henry said. “That’s the multibillion barrel prize.”

However, Shell has contracted another drill ship, the Polar Pioneer, to replace the Kulluk in its Alaska program, Henry said. Shell has been using the drillship Noble Discoverer in the Chukchi. But Shell will need two rigs in the Chukchi, to ensure the availability of a back-up relief-well rig, Shell’s Alaska spokeswoman Megan Baldino confirmed to Petroleum News.

Henry emphasized that Shell continues to see its offshore Arctic Alaska program as a key component of its plans to find future oil sources.

“Individually, it is the largest single exploration prospect in the Shell Group,” Henry said.

—Alan Bailey

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