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Vol. 12, No. 37 Week of September 16, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

Shell wells still possible

Starts to idle contract personnel, but says door not shut on ’07 Beaufort drilling

Alan Bailey

Petroleum News

It’s been more than a month since Shell hoped to start its drilling program in the U.S. Beaufort Sea off Alaska, and three weeks since the U.S. Court of Appeals for the 9th Circuit placed a temporary injunction on that program. But Shell says that it could still drill, were the court to reverse its decision in the near future.

“If the court reverses the injunction quickly, Shell could proceed with its drilling program either by reactivating the Frontier Discoverer or conducting work with the Kulluk, our drilling rig built specifically for Arctic conditions and anchored in the Canadian Beaufort,” Shell spokesman Curtis Smith said Sept. 11.

Shell had been planning to use the floating drilling platform Kulluk and the drillship Frontier Discoverer to drill three wells in its Sivulliq prospect (formerly the Hammerhead prospect) on the western side of Camden Bay during the 2007 open water season.

And in a guest editorial in this edition of Petroleum News, Marvin Odum, vice president of Shell Exploration & Production Americas, confirmed Smith’s statement, saying, “It is possible that if the Court lifted its injunction that Shell could continue with its 2007 operations.”

No specific timeframe

Smith told Petroleum News Sept. 12 that Shell has not determined any specific time when the company would have to finally abandon its 2007 Beaufort Sea drilling plans.

“We’re not there yet,” Smith said, noting that sea ice and weather conditions determine the timeframe during which drilling can be done.

But meantime, Shell is starting to stand down its contract personnel, including workers on the Frontier Discoverer.

“Shell regrets it must take this action,” Smith said. “As part of our 2007 exploration program we recruited and trained more than 700 talented personnel — among them roughly 350 Alaskans, 150 of whom are Alaska Natives. These dedicated people and jobs are important to Alaska and to Shell.”

However, Shell is proceeding with its summer seismic program in the Chukchi and Beaufort Seas. Marine mammal observers and the staff manning the call center and communication center for that program remain employed, he said.

Local concerns

Native communities on the North Slope are concerned about the potential for offshore industrial activities to disrupt the annual subsistence hunt for marine mammals, in particular bowhead whales. And the North Slope Borough has consistently opposed offshore oil and gas exploration and development outside the barrier islands, because of concerns about potential impacts on subsistence hunting and possible environmental impacts.

The borough, the Alaska Eskimo Whaling Commission and several environmental organizations have appealed to the 9th Circuit Court the U.S. Minerals Management Service approval of Shell’s Beaufort Sea exploration plan.

“The proposed exploration activities involve extensive drilling operations (involving multiple icebreakers, drilling platforms and aerial support) within the Beaufort Sea,” the borough and AEWC said in their appeal petition. “These activities threaten to inflict significant and irreparable damage upon these subsistence resources and the communities they support without an adequate consideration of the environmental impacts. … Appellants have relied upon the harvest of bowhead whales for thousands of years for their subsistence way of life.”

The Court imposed its temporary injunction on Shell’s drilling program until the appeal is settled. And since the court schedule for the appeal extends into December, by which time sea ice will likely cover the Beaufort Sea, the injunction effectively means that Shell cannot drill in 2007.

Shell says that it has been working with North Slope communities to resolve concerns about its exploration plans. At the end of July the company signed a conflict avoidance agreement with the Alaska Eskimo Whaling Commission for the 2007 whaling season. That agreement included a commitment by Shell to cease drilling operations during the Cross Island whale hunt that occurs close to the drilling area.

“Shell recognizes the challenges of balancing cultural preservation against the need to exist in a cash economy, including the development of natural resources,” Smith said. “This is a complicated issue for local communities and Shell stands ready to address these concerns.”



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