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Shell Retooling Alaska Plans

Royal Dutch Shell plc's Alaska unit said last Wednesday it has abandoned a three-year plan to explore for oil and gas in Alaska's Beaufort Sea.

The company said it told Minerals Management Service (MMS) it is dropping its Beaufort plan for 2007-2009 and will file a scaled-down plan for 2010 that takes into account environmental challenges to its previous plan from residents of Alaska's North Slope.

"Over the last three years, Shell's Beaufort Sea drilling objectives have become more focused with the acquisition and analysis of additional seismic data," said Pete Slaiby, Shell Alaska general manager. "As a result, the 2007-2009 plan no longer represents Shell's current drilling approach. We have listened closely to stakeholders and particularly the concerns around size and pace of exploration plans, and we have adjusted our plans accordingly."

Shell will file new exploration plans for 2010 that reflect the company's current drilling plans for Camden Bay -- a plan that specifically addresses concerns articulated by North Slope stakeholders related to the pace of Arctic drilling, the company said. Significant changes from Shell's 2007-2009 Plan of Exploration include a one-year drilling program as opposed to the original three-year plan; one drilling rig instead of two; a goal to drill two wells instead of four; and retrofitting the Frontier Discoverer drilling rig with the best available air emission technology, the company said.

"It's my hope this new program will further prove to North Slope stakeholders that Shell values their feedback and respects their ideas and concerns," said Slaiby.

Last December the Alaska unit said it had put on hold its drilling and exploration plans in the Beaufort Sea for this year to focus on court challenges. Instead, the unit said it would prepare drilling plans for 2010 and 2011 (see NGI, Dec. 22, 2008).

The U.S. Court of Appeals for the Ninth Circuit in San Francisco last November ruled that MMS improperly granted permission to Shell Offshore Inc. (SOI) to drill in the Beaufort Sea north of Alaska and Canada (see NGI, Nov. 24, 2008). Among other things, the three-judge panel told MMS to take a "hard look" at the analysis required under the National Environmental Policy Act before approving a drilling plan in the remote area.

In early 2007 Shell received MMS approval to ramp up the exploratory program, and SOI planned to install an offshore rig in the Beaufort Sea to drill three exploratory wells. However, the MMS approval was challenged by area stakeholders and environmental groups, and the circuit court called a halt to the program last summer.

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