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Shell leader expects Arctic offshore drilling this year

By Emily Pickrell, HOUSTON CHRONICLE

Published Thursday, January 12, 2012

Shell Oil Co. expects to clear remaining regulatory hurdles and begin drilling later this year in the Chukchi Sea near Alaska, company President Marvin Odum said at a scientific conference on Thursday.

Shell received conditional federal approval last month to drill six exploratory wells in the Arctic offshore region but still must secure permits for individual wells.

Among the requirements for Shell to obtain those permits will be selling regulators on its plan for responding to spills or other accidents at the sites.

Odum said Shell is mindful of the 2010 Deepwater Horizon disaster in the Gulf of Mexico, and the wide criticism BP and others involved received for the conditions leading to the accident and their response.

“We will have every piece of response in Alaska available on a one-hour notice,” Odum said in a keynote address at the ninth conference of the Academy of Medicine, Engineering and Science of Texas.

“The access to the equipment will provide for a much different response than what the world watched in the Gulf of Mexico.”

Environmentalists who oppose the drilling contend that no proven technology exists for cleaning up a spill in the slushy Arctic environment.

The area about 70 miles off the Alaska coast is more remote than the Gulf, and winter ice causes additional challenges.

Odum noted, however, that the drilling will be in about 150 feet of water – far shallower than the well under a mile of water that blew out in the Deepwater Horizon disaster.

He said that Shell is also working with Norwegian experts on how best to clean up any potential spills in colder climates.

On another subject, Odum predicted that Shell will soon get into the gas-to-liquids business in the U.S., with plants similar to its $20 billion Pearl plant in Qatar, which converts natural gas to liquid transportation fuel.

“With very low natural gas prices, we have a market that still has to import much of its liquid fuels,” Odum said. “It is high time to do something like that in the U.S.”

A view of the wind

In another panel Thursday, Shell Wind Energy President Richard Williams presented an optimistic view of the opportunities in wind.

“Everyone asks us if a wind farm makes money,” Williams said. “The answer is yes.”

The cost of turbine construction has decreased about 30 percent, and installation costs have gone down about 10 percent, Williams said, while improvements in safety and additional technical education programs have made it easier to find and train employees to run wind farms.

Odum emphasized, however, that while Shell is continuing to explore opportunities in renewable energy, growing demand will mean continued reliance on oil and natural gas.

“Thirty percent of global energy could come from alternatives to oil and gas, but at the same time, the world will need twice as much energy as today,” Odum said.

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