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US govt sees no urgency among Arctic offshore drillers for 2014

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ANCHORAGE, Alaska, Sept 3 | Wed Sep 4, 2013 9:53am IST

(Reuters) – Oil companies appear in no hurry to return in 2014 to the ice-choked federal waters off Alaska where Royal Dutch Shell’s exploration efforts foundered last year, the new head of the U.S. Interior Department said on Tuesday.

Interior Secretary Sally Jewell, who took up the post in April, said that in meetings with the industry on her first official visit to Alaska she heard no sense of “urgency.”

“I have not heard from any companies an urgency to go forward until they’re ready and they are confident they can do it in a safe and responsible way,” she said in a news conference.

Shell, which has spent about $5 billion to date on its Arctic offshore program, including $2.1 billion paid for leases in the Chukchi Sea in 2008, in February announced a “pause” in those efforts after struggling with various equipment problems.

The grounding of its Kulluk drillship in a storm prompted a Department of Interior review and the launch of Arctic-specific standards for all drillers in federal waters of the Beaufort, the Chukchi and in areas of transit to and from drill sites.

The baseline Arctic standards should be ready by the end of the year, Jewell said. “That would give companies an opportunity to determine whether they want to do anything next summer.”

She added that she believes the industry remains keen on prospects in the Chukchi and Beaufort Seas, despite competition for investment from cheaper shale-oil projects in the Lower 48 states.

Shell has not yet settled on its Alaska plans for next year, company spokesman Curtis Smith said on Tuesday.

“Future exploration plans for offshore Alaska will depend on a number of factors, including the readiness of our rigs and our confidence that lessons learned from our 2012 drilling program have been fully incorporated,” Smith said in an email.

ConocoPhillips, the other company with a detailed exploration plan for U.S. Arctic waters, in April dropped its plan to drill in the Chukchi in 2014 and was reevaluating its program. It has not yet made any decisions about future offshore Arctic development, said spokeswoman Natalie Lowman.

Other companies with offshore Arctic leases include Statoil , Eni and Repsol, but they have not filed any formal exploration plans with federal regulators.

While there was no drilling this summer in the offshore Arctic, there has been some industry activity there, including marine surveys in the Chukchi by Shell.

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