Bloomberg News

Shell Wins U.S. Air Permit for Oil Exploration Off Alaska

October 21, 2011

(Updates with authorization of rig and supporting vessels starting in second paragraph.)

Oct. 21 (Bloomberg) -- Royal Dutch Shell Plc won a final U.S. air-pollution permit to operate an oil-exploration rig in Alaska’s Beaufort Sea beginning in 2012.

Shell is authorized to use its Kulluk rig and supporting icebreakers and oil-spill response vessels for 120 days each year in the Arctic waters, the Environmental Protection Agency said today in an e-mailed statement.

“This air permit is one of several federal authorizations Shell needs to explore for oil and gas” off Alaska “starting in July 2012,” the agency said. “EPA’s final permit significantly reduces the potential air pollution from Shell’s drilling operations.”

Shell, which has invested about $4 billion in the Arctic leases since 2005, hasn’t drilled any wells in the region while opponents won delays with appeals and lawsuits. Environmental organizations and Alaskan native groups said it would take too long for equipment to reach the remote and icy region during an oil spill.

The company, based in The Hague, received approval from the EPA in September for the Discoverer ship to drill and station icebreakers and spill-response vessels in the Beaufort waters and the neighboring Chukchi Sea. Discoverer is owned by Noble Corp., based in Baar, Switzerland.

Two Rigs

Pete Slaiby, vice president of Shell Alaska, said in a May 2 interview that having two rigs in the Arctic would enable faster drilling of relief wells.

“We will continue to advance our drilling plans and evaluate investment decisions that would allow us to commence with a 2012 drilling season,” Curtis Smith, a Shell spokesman, said today in an e-mailed statement.

Shell, Europe’s largest oil company, still needs Interior Department approval of its Chukchi Sea exploration plan and a permit from U.S. offshore-oil regulators for each of 10 planned wells. The company won the Interior Department’s approval for an exploration plan for the Beaufort Sea, near the North Slope towns of Deadhorse and Kaktovik, in August.

The Beaufort and Chukchi seas hold about 25 billion barrels of oil, Shell says, citing government estimates. A study commissioned by the company said developing these resources would lead to 54,700 new jobs across the U.S.

-- Editors: Judy Pasternak, Bob Brennan

To contact the reporter on this story: Katarzyna Klimasinska in Washington at kklimasinska@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net


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