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Reuters: FEATURE-Beaufort Sea oil plans raise hopes, fears

Reuters: FEATURE-Beaufort Sea oil plans raise hopes, fears

“…Shell’s decision to aggressively pursue Beaufort Sea oil prospects, largely off the coast of the Arctic National Wildlife Refuge, worries some North Slope Inupiat Eskimos who have long opposed any oil development in the waters used by migrating whales and other marine mammals.”

Posted Wednesday 7 September 2005

By Yereth Rosen

ANCHORAGE, Sept 6 (Reuters) – For years, the ice-choked waters off Alaska’s Arctic coastline were considered too expensive, too forbidding and too controversial to deserve much oil industry attention.

But now one major company, after dropping over $44 million earlier this year for exploration rights, is eyeing offshore oil prospects in the Beaufort Sea as the base for long-term and large-scale Alaska operations.

As gasoline prices reach record levels, exacerbated by the impact of Hurricane Katrina on distribution and supply in North America, the oil industry is taking another look at opening up new sources of oil.

Shell Exploration & Production Co. (RDSa.L: Quote, Profile, Research), which operated in various parts of Alaska since the 1950s but departed the state entirely in 1998, has ambitions to become a major North Slope player.

“Alaska’s not a place for small dreams. It’s a place for big dreams. It’s a place for big ideas,” Chandler Wilhelm, Alaska exploration manager for Shell, said at a recent reception for local political and civic leaders.

But Shell’s decision to aggressively pursue Beaufort Sea oil prospects, largely off the coast of the Arctic National Wildlife Refuge, worries some North Slope Inupiat Eskimos who have long opposed any oil development in the waters used by migrating whales and other marine mammals.

Oil spills would be nearly impossible to clean up in broken ice or slushy conditions, they say. And noise from seismic surveys and other industrial activity is likely to upset marine mammals, particularly whales, which call out to each other underwater.

“The noise pollution is going to be scaring the whales out,” said Sheldon Brower, a whaler from Kaktovik, an island village of 280 on the refuge coastline. He has little faith in industry promises of responsible stewardship. “I’ve cleaned up at Prudhoe Bay and I see the mess that they make,” he said.

MAYBE NOT

The push for offshore development has caused some North Slope residents to rethink their support for onshore development in the ANWR coastal plain, the disputed land which the Bush administration wants to open to oil drilling.

Many locals have concluded that offshore and onshore oil development would be dependent on each other, said George Edwardson, an Inupiat whaler and geologist from Barrow.

“They can’t do offshore over there in front of the Arctic National Wildlife Refuge without a land base,” Edwardson said.

Shell officials insist their Beaufort Sea plans have nothing to do with the Arctic refuge.

“We’re doing this irregardless of ANWR. That was not a factor in the position that we took,” Wilhelm said.

Rather, high oil prices, advances in technology and access problems elsewhere in the world have made the Beaufort Sea inviting, Wilhelm said.

“From a competitive standpoint, Alaska starts to look better than it did when we were in a low-oil price environment a number of years ago,” said Wilhelm, adding that if drilling proceeds, it would be from a fixed structure, technology Shell has used off of Russia’s Sakhalin Island, he said.

Offshore development in Alaska is limited. Just one field is producing oil now from federal waters in Alaska, and only partially so. A corner of BP’s Northstar field lies on federal territory more than three miles from shore; the rest is on state territory.

Federally managed Arctic waters off Alaska likely hold about 22.49 billion barrels of recoverable oil, according to a resource assessment issued by the Minerals Management Service, a branch of the U.S. Interior Department.

Alaska’s pro-development governor said much of Alaska’s future oil production is likely to come from offshore areas.

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