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Shell, ConocoPhillips get draft Alaska air permits

Fri Jul 22, 2011 5:19pm EDT

By Yereth Rosen

ANCHORAGE, Alaska, July 22 (Reuters) – U.S. federal regulators said on Friday they issued draft air-quality permits to Royal Dutch Shell (RDSa.L) and ConocoPhillips (COP.N), a key step for the oil companies’ drilling plans in Arctic waters of Alaska.

The permits cover Shell’s plans to drill two wells annually in 2012 and 2013 on leases in the Beaufort Sea, off Alaska’s northern coast, and ConocoPhillips’ plans to drill a yet-to-be-determined number of wells in 2012 the Chukchi Sea, off Alaska’s northwest coast.

The draft permits are subject to a 45-day public comment period before being made final. Any final permits are also subject to potential administrative appeals.

The U.S. Environmental Protection Agency (EPA) on July 1 issued a separate draft air-quality permit to Shell for a drill rig the company intends to use starting next year in the Chukchi. That permit is a revised version of one that was struck down on Dec. 30 by EPA’s Environmental Appeals Board.

The appeals panel determined the old permit was inadequate and failed to incorporate updated limits for air pollution.

Securing the draft air-quality permits for planned operations in both the Beaufort and Chukchi is an important milestone for Shell, a company spokesman said.

“The issuance of a second draft air permit for our 2012 exploration program is another in a series of recent, positive developments and adds to our optimism that we will be drilling our offshore leases in Alaska by this time next year,” Shell spokesman Curtis Smith said in an email.

Shell had hoped to drill at least one well in the Beaufort this year, but dropped that plan after the EPA Appeals Board rejected the permit that had been issued last year by EPA’s Seattle-based regional office.

Shell now has new detailed exploration plans for both the Chukchi and Beaufort that are being reviewed by the U.S. Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE). Shell plans to drill up to 10 wells total in the open-water seasons of 2012 and 2013.

The company spent $2.1 billion acquiring leases in the Chukchi in 2008 and about $84 million acquiring leases in the Beaufort in 2005 and 2007. In both areas, Shell plans to explore prospects where oil was discovered in the past.

ConocoPhillips, which also acquired exploration tracts in the Chukchi in the record $2.66 billion 2008 lease sale, has not yet submitted an exploration plan to the BOEMRE, company spokeswoman Natalie Lowman said.

“So the number of wells and exactly which rig we will use is undetermined right now,” she said.

(Editing by Bill Rigby and Sofina Mirza-Reid)

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