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Shell Planning Up to Six Wells Offshore Alaska, Possibly Drilling This Summer

The Interior Department's Bureau of Ocean Energy Management (BOEM) on Friday launched a review of Royal Dutch Shell plc's newest multi-year plan to explore the Chukchi Sea offshore Alaska.

The revised exploration plan (EP) submitted by Shell Gulf Gulf Mexico Inc. proposes to pick up where the operator left off in 2012. The program includes drilling up to six wells in the Burger prospect, located in the shallow waters of the Chukchi Sea Outer Continental Shelf (OCS) off the northwest coast of Alaska. Burger is in about 140 feet of water and is 7 miles northwest of the village of Wainwright.

The M/V Noble Discoverer drillship and the semi-submersible drilling unit Transocean Polar Pioneer would be used by Shell, with each vessel providing relief-well capability for the other. The two drilling units and their supporting vessels would depart the Chukchi Sea once each exploration drilling season is completed.

To date, the super major said it has spent an estimated $7 billion on the Alaska offshore program, which has yet to yield any commercial production.

"We will be carefully scrutinizing this revised EP to determine whether it meets stringent environmental and regulatory standards," said BOEM's James Kendall, who directs the Alaska OCS Region.

Shell's Chukchi exploration three years ago was fraught with delays and other issues from start to finish, some man-made, some out of its control, including permitting delays in part related to the BP plc Macondo well blowout in the Gulf of Mexico, as well as litigation and mechanical problems (see Daily GPI, March 18, 2013).

However, last month the Obama administration upheld a disputed federal Chukchi auction that was held in 2008 (see Daily GPI, March 31). Shell was awarded most of the leases in that auction. The current estimated recoverable oil and gas in Chukchi is 4.3 billion boe, four times more than in 2008 (see Daily GPI, Nov. 3, 2014).

The revised EP faces public scrutiny and as in the past, possible litigation. The public has two opportunities to comment: a 10-day comment period to April 20 to comment on any issues that BOEM should consider in preparing the EA for the revised EP; and a 21-day comment period ending May 1 to submit comments on the revised EP.

By deeming the revised EP as submitted, BOEM has 30 calendar days to analyze and evaluate the plan, which would include preparing a site-specific environmental assessment (EA) of the proposed exploration activities required by the National Environmental Policy Act. Once the EA is completed, BOEM officials will decide whether to approve the revised EP, request modifications or deny it.

Before it conducts any operations, and in addition to BOEM's review of the EP, Shell still would need to obtain approval from the Bureau of Safety and Environmental Enforcement and other relevant federal agencies.

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