Shell Completes 2012 Arctic Drilling Program

Shell has concluded its 2012 exploratory drilling programs in the Beaufort and Chukchi Seas, the company said in a statement Wednesday.

The mandatory close of the offshore Alaska drilling window "ends a season in which we once again demonstrated our ability to drill safely and responsibly in the Arctic," Shell said.

"The work we accomplished in drilling the top portions of the Burger-A well in the Chukchi Sea and the Sivulliq well in the Beaufort Sea will go a long way in positioning Shell for another successful drilling program in 2013," Shell commented.

Earlier this month, Shell began drilling the Sivulliq prospect in the Beaufort Sea following the conclusion of the fall Kaktovik whale hunt. Last month, Shell began drilling the Burger prospect in the Chukchi Sea using the drilling rig Noble Discoverer (mid-water drillship), Dow Jones reported Sept. 10.

Shell initiated its exploration program offshore Alaska after spending the past few years seeking regulatory approval for its exploratory drilling plans. The company, which has been active in Alaska since 1918, had previously drilled a number of wells in the Chukchi and Beaufort seas in the late 1980s but pulled out of Alaska after all of its Chukchi Sea leases were relinquished to the federal government.

The company's 2012 drilling season was met with a series of delays, including the lack of certification of Shell's modified oil-spill response vessel and damage to the system's containment dome during a test last month.

Because of that damage, Shell revised its 2012-2013 exploration program to focus on drilling as many top holes as possible in the remaining season to prepare for operations in 2013.

Shell also had to interrupt drilling last month to avoid sea ice, Dow Jones reported Sept. 11.

Shell received permission Aug. 30 from the Bureau of Safety and Environmental Enforcement to move forward with limited preparatory activities in the Beaufort Sea for its exploration program there.

However, Shell was not allowed to drill into oil-bearing formations until the Bureau of Safety and Environmental Enforcement approved Shell's Arctic Challenger oil-spill containment vessel.

Last month, BSEE granted Shell approval to conduct preparatory work for its Beaufort Sea drilling program, but also with the same restriction on drilling into oil-bearing formations.

Earlier this month, the U.S. Coast Guard granted certification for the Arctic Challenger containment vessel, which means Shell will have the necessary assets in place to drill and evaluate hydrocarbon zones in 2013, said Pete Slaiby, vice president of Shell Alaska, in an Oct. 12 statement. The containment vessel also received its American Bureau of Shipping certification.

"We are very pleased with the work we accomplished this year and look forward to picking up where we left off when the sea ice retreats next summer," said Shell in its Wednesday statement.

A 2011 report by Northern Economics and the Institute for Social and Economic Research at the University of Alaska estimates Alaska's offshore to hold 27 billion barrels of oil and 132 trillion cubic feet of natural gas.


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