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Shell Preps Alaska Prospects in Chukchi, Beaufort Seas

An exploratory well drilled in Alaska's Beaufort Sea bodes well for more aggressive exploration in the Arctic waters in 2013, according to a Royal Dutch Shell plc executive.

Shell began drilling the Sivulliq prospect in the shallow waters of the Beaufort last Wednesday after receiving permission to begin preparatory work from the Bureau of Safety and Environmental Enforcement. Drilling also has resumed on the Burger-A prospect in Alaska's Chukchi Sea, following some stops and starts (see NGI, Sept. 17). Daily GPI, Sept. 18).

"This marks the first time two rigs are drilling, simultaneously, offshore Alaska in more than two decades," said Pete Slaiby, vice president of Shell's Alaska operations. "In the weeks ahead, we look forward to operating safely and responsibly, putting Americans to work and adding to Shell's long, successful history of drilling offshore Alaska."

No hydrocarbons are being targeted in this year's drilling, which is to end in the Beaufort by the end of this month. However, top hole work is readying both sites for blowout preventers and to set casings, all in advance of an expanded drilling program next year.

"The top portion of the wells drilled in the days and weeks ahead will be safely capped and temporarily abandoned this year, in accordance with regulatory requirements," Slaiby said.

Shell Oil President Marvin Odum said the company considers offshore Alaska to be a long-term quest; delays are built into the program. To date Shell has spent close to $5 billion to advance its Arctic dreams, which have advanced despite court challenges and additional scrutiny that followed the Macondo well blowout two years ago in the deepwater Gulf of Mexico.

Significant resources in the Chukchi and Beaufort seas will be the payoff, Odum said. The U.S. Geological Survey has estimated Alaska's offshore may hold 130 Tcf of recoverable natural gas and 26 billion bbl of oil.

If the Beaufort and Chukchi prospects "prove up the way we hope they will, and the way the U.S. government thinks they may, then this will be very much worth all our time and effort," said Odum. "There is still great enthusiasm for that."

Alaska Sen. Lisa Murkowski called Shell's dual drilling projects "bittersweet" because even though it's "welcome news that Shell has finally begun exploration in the Beaufort and that work in the Chukchi is progressing, but it shouldn't have required seven years and $5 billion to get to this point. Something is very wrong with this picture."

Before Shell drills into the hydrocarbon targets, it has to receive final approval from federal officials for its oil spill containment vessel.

"Moving forward, it's important that Shell's containment vessel is certified and that the company receives all of the exploration permits it applied for this year as soon as possible," Murkowski said. "While the permits will not help Shell this season, they will provide all of us with a level of confidence that Shell will be allowed to proceed with drilling next year."

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