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Vol. 17, No. 48 Week of November 25, 2012
Providing coverage of Alaska and northern Canada's oil and gas industry

Explorers 2012: Alaska: a strategic region for Shell

Shell has made it clear from the start of its current Alaska venture that it views Alaska’s Arctic outer continental shelf as a strategic region for future business growth. The company sees Alaska as a long-term play and has indicated in words and actions its willingness to “stay the course” in pursuing what it believes to a rich source of new hydrocarbon resources.

The company purchased a substantial number of Beaufort Sea leases in 2005 and initially planned to drill at Sivulliq in the Beaufort in 2007. But, faced with a barrage of litigation against permits that the company needed, the company repeatedly postponed and modified its plans.

Chukchi leases

In the 2008 U.S. Minerals Management Service Chukchi Sea lease sale Shell paid $2.1 billion for a series of leases across the Chukchi Sea, with $1.5 billion of that massive sum going on leases around the Burger prospect. Shell subsequently conducted a 3-D seismic survey over its leases, following that survey with geotechnical and shallow hazards surveys of prospective drilling sites.

For several years litigation challenging the environmental impact statement, or EIS, for the Chukchi Sea lease sale held up progress towards Shell’s drilling in its Chukchi Sea leases. However, after a partial rewrite of the EIS as a consequence of the appeal, in October 2011 Judge Ralph Beistline in the federal District Court in Alaska gave the go-ahead for lease related activities in the Chukchi. In February 2012 Beistline finally dismissed the appeal, which has since moved to the 9th Circuit court.

Beistline’s October order enabled BOEM to review and approve Shell’s Chukchi Sea exploration plan, thus enabling the permitting process to move to a position where Shell could drill in 2012.

Beaufort potential

Although Shell has said that it views Chukchi Sea exploration as its top priority in the Alaska outer continental shelf, the company also sees the Beaufort Sea as having excellent resource potential in relatively close proximity to the existing North Slope oil infrastructure. The company owns leases in the Camden Bay area and in Harrison Bay to the west of Prudhoe Bay. And, although Shell’s exploration efforts in the Beaufort Sea have focused on the Torpedo and Sivulliq prospects in the Camden Bay area, the company has conducted a 3-D seismic survey in Harrison Bay where it is exploring in partnership with Eni Petroleum, the co-owner of the Harrison Bay leases.

—Alan Bailey



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