Shell wins approval for limited Beaufort drilling

Thu Sep 20, 2012 6:01pm EDT
 
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By Yereth Rosen

ANCHORAGE, Alaska (Reuters) - Royal Dutch Shell Plc (RDSa.L: Quote) on Thursday won approval for limited drilling in the Beaufort Sea off northern Alaska, allowing the British oil company to start one exploration well there while it pursues a separate prospect in the Chukchi Sea.

The U.S. Department of Interior's Bureau of Safety and Environmental Enforcement granted Shell a permit to drill to shallow depths at the Beaufort well, which follows approval three weeks ago for similar preliminary drilling in the Chukchi.

Environmentalists criticized the decision, even though the Beaufort permit will not allow Shell to penetrate any oil- or gas-bearing zones. The restrictions are similar to those imposed in the Chukchi, where Shell was granted approval to drill down to only about 1,400 feet because it was unable to bring required oil-spill equipment to the site, the agency said.

The government "has set the bar high for exploration activities in the Arctic, and any approved operations must meet those standards," Jim Watson, the agency's director, said in a statement.

Shell spokesman Curtis Smith called the Beaufort approval a "major milestone" that clears the way for drilling to start within days. Once the local Inupiat Eskimo whale hunt is over, Shell will anchor its Kulluk drill rig in the Beaufort.

Shell is poised to resume shallow drilling in the Chukchi after a large ice floe moved out of the area, Smith said. It was able to drill for only one day before the ice drifted in, and plans to re-anchor the Noble Discoverer (NE.N: Quote) rig at its Burger prospect later on Thursday and restart drilling shortly after.

All this 'top-hole' preparatory work would account for about half the time it takes to drill a well. "Drilling we complete this year will position us nicely for 2013," Smith said.

But environmentalists said Shell's setbacks this year demonstrate the pitfalls of offshore Arctic oil development.   Continued...