Anchorage Daily News: Shell may disband Alaska drill fleet in wake of ruling

By WESLEY LOY
[email protected]

Published: September 12, 2007
Last Modified: September 12, 2007 at 04:39 PM

Shell will start releasing contract workers and soon could disband its offshore drilling fleet due to a federal court order blocking the oil company’s plans to drill exploratory wells this fall in the Beaufort Sea.

The retrenchment does not mean Shell is abandoning its drilling goals, Shell spokesman Curtis Smith said today.

The Dutch energy giant is moving ahead with offshore seismic testing in the Beaufort as well as the Chukchi Sea, he said.

“This is just the first year in a multiyear exploratory program,” he said. “Shell is committed to Alaska.”

Several organizations including the North Slope Borough, the Alaska Eskimo Whaling Commission and environmental groups on Aug. 15 won an indefinite ban on drilling from the 9th U.S. Circuit Court of Appeals in San Francisco. The groups is arguing industrial noise and potential spills could hurt migratory whales and the Beaufort Sea ecosystem.

The court order idled Shell’s two drilling ships, one anchored at Dutch Harbor and another in western Canada, and now the company will begin a “staged release of contract personnel” as no drilling appears likely this year.

For its $200 million exploration program, Shell had recruited and trained more than 700 people, including 350 Alaskans, Smith said.

The people generally are employed by contractors Shell hired. Smith said he couldn’t specify how many would be let go.

Many of the jobs affected are associated with the drill ship Frontier Discoverer, now anchored at Dutch Harbor along with five support vessels including icebreakers, Smith said.

The Discoverer, under long-term contract to Shell, likely will sail away soon to another drilling job elsewhere in the world, he said.

Shell has asked the San Francisco court to lift its no-drilling order, and if that happens quickly, the company could reactivate the Frontier Discoverer or use its other drill ship, the Kulluk, to probe its Sivulliq prospect, thought to hold hundreds of millions of barrels of oil.

The prospect is west of the Arctic National Wildlife Refuge about 16 miles offshore.

The seismic testing involves a different set of ships, including the Gilivar, a seismic vessel operated by Shell contractor WesternGeco. Several support boats will carry people and equipment to observe and listen for whales and other marine mammals, Smith said. Aircraft also will be used.

“Shell regrets it must take this action,” the company said of the job cuts. The company said talks are “ongoing” with North Slope residents who question the effects of drilling on subsistence whale hunts.

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