Shell Prepares for Start of Offshore Alaska Drilling

Royal Dutch Shell (RDSA) is currently deploying some workers and infrastructure in Alaska to start drilling for oil and gas in the Arctic next summer as the oil giant is "optimistic" that new legal challenges won't derail an exploration plan on which it has spent $4 billion, a senior executive said Monday.

"We are already spending money building resources, putting people in place to be ready to drill in the summer of 2012," Marvin Odum, president of Shell Oil Co., the U.S. unit of the Anglo-Dutch giant, told Dow Jones Newswires in an interview. "Because the buildup time to have all the resources on time, it's a fairly long runway we have to start working [on] now to be ready next summer. Spending is going to ramp up after the end of year, in the first months of next year."

The remarks came after some environmental groups filed this month a formal challenge to air quality permits that Shell needs to drill in the Arctic. The permits under question were approved by the U.S. Environmental Protection Agency in September and they allow Shell to use the drillship "Discoverer" and a fleet of icebreakers and other vessels in the Chukchi and Beaufort Seas. In September, other environmental groups also sued the Interior Department for approving the company's exploration proposal for the Beaufort.

"We expect legal challenges every step of the way. But we are cautiously optimistic that we will be in a position to drill next year," Odum said.....Read the entire article.


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Ken Salazar in Alaska....President Obama Backs Additional Oil Drilling in Alaska

Interior Secretary Ken Salazar came to Anchorage on Monday and said the Obama administration supports more oil drilling in Alaska, potentially including offshore Arctic development.

Salazar joined Alaska Sen. Mark Begich and Rhode Island Sen. Jack Reed, both Democrats, for a meeting with Alaska businesspeople and said the president's feeling toward Arctic offshore drilling is "Let's take a look at what's up there and see what it is we can develop." But any Arctic oil development must be done carefully, he said. Salazar said the Arctic lacks needed infrastructure for responding to potential offshore oil spills and cited painful lessons from the Deepwater Horizon spill in the Gulf of Mexico last year.

"Not the mightiest companies with multibillion dollar pockets were able to do what needed to be done in a timely basis, and the representations of preparation simply turned out not to be true from the oil companies that had a legal obligation to shut down that kind of an oil spill. ...

When you look at the Arctic itself, we recognize that there are different realities - the ocean is a much shallower ocean, conditions are very different than we had in the Gulf of Mexico. (But) there are challenges that are unique to the Arctic," Salazar told Alaska reporters......Read the entire article.