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Shell to scale back Arctic drilling plans

By Jennifer A. Dlouhy: Updated 07:33 p.m., Thursday, July 26, 2012

Shell’s Chief Executive Officer Peter Voser addresses the audience during the opening ceremonies for Motiva’s Crude Expansion Project in Port Arthur on Thursday. Photo taken Thursday, May 31, 2012 Guiseppe Barranco/The Enterprise Photo: Guiseppe Barranco / The Beaumont Enterprise

Shell is scaling back plans to drill up to five wells in Arctic waters this summer amid a series of setbacks, including stubborn sea ice clinging to Alaska’s shores and delays in construction of an emergency oil spill containment barge.

Royal Dutch Shell CEO Peter Voser told analysts Thursday that the company anticipates completing just two exploration wells in the Chukchi and Beaufort seas.

In an apparent bid to take advantage of drilling rigs and support vessels already in the region, Voser said Shell is considering initial top-hole drilling in other parts of the area – allowed as long as the company does not penetrate hydrocarbon zones. Shell could then come back to those sites in future years to complete the wells.

“Ice conditions will dictate how long the drilling season will last, with a slower start due to heavy ice conditions,” he said.

Unusually thick shorefast ice is keeping Shell from sending drill ships into the Arctic waters and shortening an already brief window. Under federal regulations, Shell has to stop drilling in hydrocarbon zones by Oct. 31 in the Beaufort Sea; regulators are requiring that work to end 38 days earlier in the Chukchi Sea.

In the past five years, ice has encroached over the planned drill sites as early as Nov. 1, but this summer, the slow melt of multi-year ice at the season’s start means the water is colder and is a signal it could return even earlier.

Shell had planned to launch its Arctic drilling program in July; now, it is anticipating an early August start date, said spokeswoman Kelly op de Weegh.

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