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Shell Fears Yearlong Delay Of Alaska Drilling Program -FT


The head of Royal Dutch Shell PLC’s (RDSA, RDSA.LN) U.S. entity fears difficulties in gaining a federal air-quality permit will push back its long- delayed plans to drill in Alaska’s Artic waters by another year, the Financial Times reported online Wednesday.

“It’s a significant challenge to drilling in 2011,” Marvin Odum, president of Shell Oil Co., told the newspaper.

The U.K.-Dutch company is halfway through 10-year leases in Alaska but continues to struggle to move ahead with its $3.5 billion investment to drill in the state’s Beaufort and Chukchi seas. The plans have been dogged by environmental lawsuits and permit issues on top of calls for better spill prevention and containment capabilities following BP PLC’s (BP, BP.LN) leaking- well disaster in the Gulf of Mexico last year.

On Dec. 30, the Environmental Appeals Board invalidated Shell’s permits, saying the U.S. Environmental Protection Agency hadn’t been rigorous enough in granting the company an air-quality permit.

Odum told the FT that this was the last of 35 significant permits required to drill in the Alaskan Arctic, and that while Shell could “see the endpoint,” it might take all of 2011 or into 2012 to resolve.

He pointed out that the U.S. commission investigating the Gulf leak said in its report Tuesday that the need for additional research into drilling in Arctic conditions “should not be used as a de facto moratorium on activity in the Arctic.” The report, however, called for federal research into concerns such as marine and bird assessments, and spill and response challenges presented by the conditions.

The Shell executive said he is aware of these challenges and that the company has taken them into account, agreeing to build an Arctic-specific spill containment system and put on standby a rig in case a relief well is needed. He objected to the commission’s assertion that the BP accident indicated safety issues throughout the oil industry.

Full story at 00144feab49a.html#axzz1AeojfhGU

-Dow Jones Newswires; 212-416-2900

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