Royal Dutch Shell Plc  .com Rotating Header Image Shell to lay-off workers barring change from courts

By Eric Lidji
Published September 12, 2007

Shell Oil announced Tuesday that it plans to start laying off personnel from its offshore drilling program in Alaska in response to delays brought about by a lawsuit undergoing review by a federal appeals court.

While the company could not provide a detailed breakdown of how many people might be affected by the decision or when the lay-offs might begin, it did say the measure would take effect “gradually” and could effect hundreds of workers.

Shell hired around 700 workers, about half of whom are from Alaska, to work on its 2007 exploration program in Beaufort Sea off the northern coast of Alaska near the edge of the Arctic National Wildlife Refuge.

Shell received permits to work in the federal waters off the North Slope earlier this year, but immediately faced legal challenges from environmental and Alaska Natives groups, who argued that the industrial activity could endanger subsistence resources and wildlife in the area. The 9th Circuit Court of Appeals suspended Shell’s drilling operations in July, and indefinitely postponed the program in August.

Shell said the proposed personnel cuts could be averted if the court reverses the decision.

The August court order effectively ended Shell’s hope for drilling this year. When the arctic waters off the North Slope freeze over for the winter, the drill ship contracted for the exploration work is set to leave for Australia and won’t return until next year. The company also has a special arctic drill rig staged in Canada that is “readily available” if the company gets permission to drill again.

Even if the delays continue, Shell said it expects to continue with certain elements of its operations, including a seismic program not included in the court order. The proposed cuts are also not likely to affect certain personnel like cooks and engineers, according to company spokesman Curtis Smith.

The company said it plans to continue discussions with North Slope Borough Mayor Edward Itta, who has publicly questioned the offshore drilling project.

Shell was an important player in the Alaska oil industry until it sold its leases and left the state in the mid-1990s. The company returned to Alaska in 2005.

Contact staff writer Eric Lidji at 459-7504.

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