The Associated Press May 5, 2011, 10:39AM ET

Shell files plan for offshore drilling in Beaufort

A major oil company that hopes to drill wells in Arctic waters off Alaska's northern coast has filed its proposed Beaufort Sea exploration plan with federal authorities.

Shell Oil as expected filed a plan Wednesday to drill as many as four exploration wells in the Beaufort over the next two years.

Shell Alaska Vice President Pete Slaiby earlier this week said the company will file a plan next for the Chukchi Sea next week seeking permission for up to six exploratory wells over the next two years. The company will use two drilling ships for the 10 wells.

Slaiby said in the Shell announcement that the company is confident it can handle challenges presented in Arctic offshore drilling, including the possibility of a spill -- like the BP-Macondo disaster last year in the Gulf of Mexico.

"We believe the conversations we are having with regulators and government officials are more positive in view of the safeguards we have put in place, even prior to the Macondo incident," Slaiby said. "As a result, we are cautiously optimistic we will be allowed to pursue a multi-well drilling program in 2012 as we have always planned."

Federal officials estimate Arctic waters hold 26 million barrels of recoverable oil and 130 trillion cubic feet of natural gas.

Shell has spent more than $3.5 billion in Alaska for outer continental shelf drilling, including $2.1 billion for leases in the Chukchi Sea in a 2008 lease sale, but has drilled no new wells because of court challenges by environmental groups or its inability to obtain permits.

Environmental groups say Shell has overstated its ability to clean up a catastrophic spill. Margaret Williams, director of the World Wildlife Fund's Arctic program in the United States, said neither Shell nor the administration have fully considered lessons from the Gulf spill.

Shell's planned drilling schedule, she said, likely would put oil into ice if it spilled near the end of the open water season, which lasts only about three and a half months.

"When you start getting into the potential of two wells ... there are just huge, huge risks involved," she said.

Seismic testing, ship traffic and industry infrastructure associated with multiple wells are concerns because of the effect on marine wildlife, she said.

Mike LeVine, an attorney for Oceana, said the "bullheaded" rush to drill in the Arctic should stop.

"We know that we can't clean up a spill in the Arctic, and we know that we're lacking basic scientific information about the ocean," LeVine said. "Until we can have a full and fair evaluation of the benefits and risks, we just don't know enough to make good decisions."

That basic information, he said, includes what animals are around at what times, what they eat and how they might be affected by drilling operations.

After the Deepwater Horizon blowout, Interior Secretary Ken Salazar suspended applications for Arctic drilling and has said the department will take a guarded approach guided by science and the voices of North Slope communities.

Shell contends the risk of a catastrophic blowout in Arctic waters is smaller than the Gulf because the water is far more shallow and wells will be under less pressure.

Shell's initial spill response plan calls for spill responders to be on site within an hour with skimmers and boom. The company said it will build and stage an oil spill capping system designed to capture oil and natural gas at the source in the extremely unlikely event of a shallow water blowout.


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