Time ticking on Shell's offshore Arctic drilling

Wed Jul 25, 2012 10:25pm EDT
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By Yereth Rosen

ANCHORAGE, Alaska (Reuters) - Royal Dutch Shell's (RDSa.L: Quote) plans to drill exploratory wells in remote Arctic waters off Alaska are being hampered by its failure to secure key regulatory approvals and lingering sea ice, which have already led to a three-week delay.

Shell had hoped to use this year's brief, ice-free season to drill up to three exploratory wells in the remote Chukchi Sea off northwestern Alaska and up to two in the Beaufort Sea off the state's northern coast. The company has similar plans for 2013.

But bad luck with sea ice and a series of other problems make it doubtful that Shell will accomplish all of its goals this year, a company spokesman said on Tuesday.

"We've recalibrated what's possible, based on weather and logistics this year. No matter how that turns out, we're trying to make the most of the time that we do have in the theater," said Curtis Smith, Shell's spokesman in Alaska.

Shell's original ambitions to start a four-month drill season on July 1 have been upended by heavier-than-expected ice coverage in the Bering Sea off western Alaska.

Despite sparse cover in most of the Arctic Ocean, ice in the Chukchi Sea is still too thick to allow ship traffic, U.S. Coast Guard Commander Christopher O'Neil said on Tuesday.

Most of Shell's ships are currently gathered at the Aleutian port of Dutch Harbor, about 1,000 miles away from their Arctic destinations. But one important ship, an oil-spill barge that is required to be part of the drilling fleet, has been detained farther south.

The barge, the Arctic Challenger, has yet to be cleared by the Coast Guard for seaworthiness. It is undergoing modifications in Bellingham, Washington, in an effort to pass the Coast Guard's tests, O'Neil said.   Continued...

A Shell logo is seen at a petrol station in Ankara March 6, 2012. REUTERS/Umit Bektas