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Shell To Shift Alaska Exploration Plans

May 6, 2009, 4:52 PM 

The New York Times

BoneDamon Winter/The New York Times
A bone from a bowhead whale skull rests on the arctic shore outside of Barrow, Alaska. Residents along Alaska’s North Slope sued to stop Shell oil from drilling in the nearby Beaufort Sea, where the whale is migrates. Shell now says it’s rethinking its plans.

After battling native communities and environmental groups on Alaska’s North Slope over its offshore drilling plans, Royal Dutch Shell said Wednesday that it was scaling back its exploration program in the Beaufort Sea.

The company said it had informed the Minerals Management Service on Tuesday that it was withdrawing its drilling plans for the 2007-2009 period, which expires at the end of the year, and that it plans to file a new, more focused, exploration program soon.

The decision comes as oil prices have dropped sharply in the past year and companies are scaling back some of their most expensive drilling programs. It also follows a ruling by a federal appeals court last November that blocked Shell’s drilling program after the Minerals Management Service failed to conduct a proper environmental study.

Environmental groups, including the Alaska Wilderness League, as well as theNorth Slope Borough, which represents the indigenous Inupiat people, had sued to stop Shell from drilling, claiming that the company’s plans to send icebreakers, drilling ships and an armada of support vessels to conduct seismic surveys might harm bowhead whales, which migrate through the Beaufort Sea twice a year.

The decision was seen as a costly setback for Shell, which waged a vigorous campaign to expand offshore exploration in Alaska. The company spent over $2.1 billion to acquire leases in the Chukchi Sea and the Beaufort Sea.

Shell said it would soon be filing a new exploration plans for 2010 reflecting the company’s “more focused” drilling plans for Camden Bay. The company said the new plan “specifically addresses concerns articulated by North Slope stakeholders related to the pace of Arctic drilling.”

The company said that the new plan would include a one-year drilling program as opposed to the original three-year plan; one drilling rig instead of two; a goal to drill two wells instead of four; and retro-fitting the Frontier Discoverer drilling rig with the best available air-emission technology.

The company said that the reduced program would mean fewer jobs and contracting opportunities.

“We have listened closely to stakeholders and particularly the concerns around size and pace of exploration plans,” Pete Slaiby, Shell’s general manager for Alaska, said in a statement, “and we have adjusted our plans accordingly,”

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