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Alaska Journal of Commerce: Shell Set to Drill in Beaufort Sea

By  Tim Bradner    
Shell is gearing up for an aggressive 2007 offshore exploration program in the Alaskan Beaufort Sea, with plans to operate two drilling vessels and drill three wells, company officials told an Alaska industry contractor group in a Jan. 25 briefing.

“We like Alaska. It’s part of the United States. We have a lot of experience here, and it’s good to be back,” Rick Fox, manager of Shell’s Alaska operations, told the Alaska Support Industry Alliance, an oil contractor association.

Shell has a long history in Alaska and was active in the initial development of Cook Inlet oil and gas fields, as well as Beaufort and Chukchi sea exploration in the 1980s and 1990s. The company made nine exploration discoveries in Alaska, Fox told the Alliance.

Shell closed its Alaska operations in the mid-1990s, selling its producing leases in the Middle Ground Shoal field in Cook Inlet, but returned to the state in 2005 after acquiring 103 federal leases in the Alaska Beaufort Sea and 33 state leases on the Alaska Peninsula near where the company hopes to explore in an offshore federal sale near Bristol Bay.

The company hopes to begin drilling Aug. 1 and will be managing a small fleet of vessels, including the drillship Discover and the Kulluk, a specialized vessel built for Arctic offshore drilling. The flotilla will also include icebreakers, support vessels for anchor-handling and a new 300-foot oil-spill response barge being delivered to the Beaufort Sea this summer, Fox told the Alliance.

The response barge, which will carry spill containment and clean-up equipment, will be on standby nearby the drilling vessels while operations are underway, Fox said. The response equipment will be operated by a subsidiary of Arctic Slope Regional Corp., an Alaska Native-owned corporation that is heavily engaged in oil service operations, Fox said.

Shell will also operate another vessel working on marine subsea hazards and geotechnical soils surveys in the area where the company is exploring. Shell will complete three-dimensional seismic surveys in the Beaufort Sea that were attempted last year but not done because of adverse ice conditions, Fox told the Alliance.

The Kulluk is currently undergoing renovations and upgrades at McKinley Bay, in the Canadian Beaufort Sea, while the Discover is in a Singapore shipyard being fitted with an external ice hull, Fox said.

Shell plans to drill three prospects in the eastern Beaufort Sea this summer, Fox said. An area of immediate interest is the Hammerhead oil discovery made in the 1980s by Unocal Corp. in early Beaufort Sea exploration. The well was flow-tested but was not developed because oil prices and the industry technology available at the time did not make it economic, Fox said. Shell acquired the Hammerhead federal OCS leases in March 2005, along with other leases across a wide area of the Alaskan Beaufort Sea.

Fox told the Alliance that Shell is recruiting to fill local company positions and expects contractors will hire about 270 to support its operations this year.

Construction has also started on a 60,000-square-foot hanger and support facility in Deadhorse, near Prudhoe Bay, to support Shell’s planned 2007 and 2008 offshore exploration. Marsh Creek Services, a joint-venture of Fairweather Exploration and Production Services and Kaktovik Inupiat Corp., is developing the support center, which is due to be complete by August.

In another development, Shell will experiment this spring with marine seismic surveys done on floating ice several miles offshore Prudhoe Bay. If the tests are successful, Shell will have an alternative to conventional marine seismic surveys done with vessels during the summer. The summer surveys bring objections from local Inupiaq Eskimos because of possible interference with bowhead whales, which the Inpupiat hunt for subsistence.

The tests will be done between March and May by Shell’s contractor, Veritas.

Wednesday, February 07, 2007

Copyright (c) 2007, Alaska Journal of Commerce, Anchorage.Distributed by McClatchy-Tribune Business News.

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