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NEWS BULLETIN

July 13, 2007 --- Vol. 13, No. 62July 2007

Shell on track with Beaufort 2007 plans

A Petroleum News source says the Canadian crew of the Kulluk drillship has been largely replaced by Alaskans with the same expertise, but the crew change-out will not necessarily put Shell behind schedule for 2007 drilling of its Sivulliq prospect in the Beaufort Sea offshore Alaska. The Kulluk is one of two drillships that are part of Shell's plans to drill as many as four Sivulliq wells.

Before it can begin drilling Shell still needs certification of consistency with the Alaska Coastal Management Plan. Final approvals by the U.S. Minerals Management Service of Shell’s Beaufort Sea exploration plan, oil discharge prevention and contingency plan and permits to drill all depend on ACMP consistency certification.

Although Alaska’s Permitting.html'>Office of Project Management and Permitting published an ACMP consistency determination on June 19 for the Shell program, the North Slope Borough objected to that finding and requested elevation of the ACMP determination to the commissioner of the Alaska Department of Natural Resources. Ben Greene, manager oil and gas for OPMP, told Petroleum News July 13 that DNR is planning to hold a meeting of interested parties on July 19, as part of the elevation process. That meeting is dependent on DNR Commissioner Tom Irwin’s return from Washington, D.C.

Meanwhile, discussions continue between North Slope communities and Shell for a conflict avoidance agreement for subsistence hunting activities. Shell will need a conflict avoidance agreement to obtain authorizations for the incidental harassment of marine mammals, including whales, seals and polar bears, from the National Marine Fisheries Service and the U.S. Fish and Wildlife Service.

Harry Brower, chairman of the Alaska Eskimo Whaling Commission, told Petroleum News July 13 that AEWC was still communicating with Shell about conflict avoidance issues that remain to be resolved.

“It is still in the works. … We’re still negotiating,” Brower said.

But despite all this, Shell’s Alaska spokesman Curtis Smith says the company still plans “to conduct exploratory drilling, site clearance, and seismic activities in the Beaufort Sea in 2007. We are also creating an oil spill response capability for the Beaufort as well as numerous minor exploration and pre-feasibility projects. Additionally … we have been talking extensively with local communities and will continue to engage a wide range of stakeholders to understand and address their issues.”

Smith also said “Shell believes Alaska has significant untapped potential that can play an important role in meeting the energy challenge and improving the lives and livelihoods of its residents.”

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