U.S. Conditionally Approves Shell Arctic Drilling Plan

   < < Go Back
from The Wall Street Journal,

Company aims to begin drilling in Arctic Ocean this summer.

The U.S. government on Monday conditionally approved a plan by Royal Dutch Shell PLC to drill in the Arctic Ocean this summer, removing one of the biggest obstacles the energy company must overcome before it can explore for oil and natural gas in the Arctic’s frigid, isolated waters.

The conditional approval from the Interior Department is contingent on Shell obtaining several additional federal permits, approvals Shell hopes government officials will make in the coming weeks.

“We’d like to see them sooner rather than later,” Shell spokesman Curtis Smith said Monday. “We’re moving assets and people as if we’re going to achieve those permits. We have reason to believe we will.”

Other obstacles, including ongoing legal battles brought by environmental groups and an effort by Seattle officials to keep Shell from using the city’s port to keep its drill ships, could delay Shell’s plan.

Shell plans to invest $1 billion in its Arctic project this year, adding to the $6 billion the company has already spent on exploration drilling offshore Alaska in the past eight years. Its only successful drilling attempt since 2007 was hindered by bad weather and mechanical failures.

Environmental groups criticized the approval. “Our government has rushed to approve risky and ill-conceived exploration in one of the most remote and important places on Earth,” said Susan Murray, a deputy vice president for Oceana, an environmental group. “Shell’s need to validate its poorly planned investment in the U.S. Arctic Ocean is not a good reason for the government to allow the company to put our ocean resources at risk.”

The region’s cold climate provides a brief window—generally from July to October—when companies can drill safely given the icy conditions the rest of the year.

Shell is seeking approval to drill up to six exploratory wells in the U.S. portion of the Chukchi Sea, off the West Coast of Alaska between the U.S. and Russia.

No energy company currently is drilling in the U.S. portion of the Arctic Ocean. Shell’s Arctic plans are currently the company’s largest, most high-profile and expensive exploration project.

More From The Wall Street Journal (subscription required):