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Feds say timely answer ahead on Alaska drilling

January 10, 2012 at 11:30 am by Puneet Kollipara

A top federal official said today the Interior Department is committed to giving Shell Oil Co. a firm, timely answer on its applications to drill off the Alaska coast starting next summer.

Deputy Interior Secretary David Hayes said his department is well along in its consideration of several components of Shell’s applications for drilling exploratory wells in the Beaufort and Chukchi seas starting next summer.

“We are committed to giving them a timely up or down,” Hayes told reporters at an event hosted by Platts Energy Podium. Although he didn’t specify an exact date to expect a final decision, he said the department has a general sense that Shell needs input early this year.

Shell has spent $4 billion in securing leases from the Interior Department in those two seas since 2005. But the company has yet to drill a single well thanks to a variety of events, ranging from litigation to the successful appeal of air permits.

The company has already received approval from the department on a broad plan for exploratory drilling in the Beaufort Sea. The company also has gotten Interior Department approval for its Chukchi exploration plan, albeit with some strings attached aimed at ensuring any spills could be stopped and cleaned before the water ices up.

Although environmental groups have mounted a legal challenge to the Beaufort plan, Hayes said the department is processing the applications under the assumption that the litigation doesn’t pose a barrier.

Shell must get permits for each of the individual wells before it can start drilling them, and the Interior Department must sign off on the company’s oil-spill response plans. Hayes said Interior doesn’t yet have Shell’s applications for individual well permits.

Hayes also defended the Interior Department’s decision to make approval of the Chukchi exploration plan contingent on restricting the time when Shell could drill.

The Bureau of Ocean Energy Management has said Shell would have to stop any drilling 38 days before the first day when ice starts encroaching over the drilling site, typically Nov. 1 or later, under the condition. Shell has criticized the restriction, saying it “could severely impact our ability to deliver a complete Chukchi program.”

“We believe that was the right decision to make a conservative decision, and we intend to stand by it,” Hayes said.

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