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Shell encouraged by Salazar’s Arctic oil plans

Reuters Africa
Wed Dec 1, 2010 10:53pm GMT

* Shell Alaska drill permit being considered

* Shell says plans to drill in 2011

* Administration may allow Alaska lease sales from 2012

By Yereth Rosen

ANCHORAGE, Alaska, Dec 1 (Reuters) – Royal Dutch Shell (RDSa.L: Quote), which has invested over $3.5 billion since 2005 in a program to find oil in Arctic waters off Alaska, welcomed the U.S. Interior Secretary’s announcement on Wednesday that the administration is considering approving future development in the region.

Despite banning drilling in Atlantic Coast waters and off Florida’s Gulf shoreline — largely a reaction to BP’s (BP.L: Quote) massive oil spill earlier this year — Interior Secretary Ken Salazar said the agency that oversees offshore oil and gas drilling is processing Shell’s application to drill a well off Alaska next summer. [ID:nN01148955]

“Today’s announcement was a positive for Shell and a positive one for Alaska. It’s one that recognizes that responsible oil development can take place in the Arctic, as it has in the past,” said Curtis Smith, a spokesman for Shell’s Alaska operations. “As a result, we’re going to continue to make plans to drill in 2011.”

Shell has applied for a permit to drill a single well in the Beaufort Sea at its Sivulliq prospect. The company may apply for permits to drill other wells next year in Arctic waters, Smith said.

Salazar’s announcement stopped short of granting Shell the drill permit it seeks. Approval is contingent on a new environmental review and some new safety measures, the secretary said.

While Shell does not necessarily need final permit approval immediately, “We still need clarity from this administration by year’s end,” Smith said. “We think today’s announcement is a major step toward that end.”

Shell had hoped to get some certainty by some time in December that it would eventually be allowed to drill, but no time frame for approval was specified by the director of the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), the government agency that oversees offshore energy projects.

“We are not going to be constrained by any artificial deadlines,” BOEMRE director Michael Bromwich said in a conference call with reporters on Wednesday.

The U.S. administration said it will also consider new Arctic lease sales in 2012 and later years. (Editing by Bill Rigby and Lisa Shumaker)

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