Shell says delays in Arctic drilling ‘highly unusual’

By Katarzyna Klimasinska
Bloomberg News

Royal Dutch Shell Plc, blocked for about four years from developing 10-year Arctic leases purchased from the U.S., said the delays are “highly unusual” and undermine confidence in the federal offshore program.

The Hague-based company acquired oil leases in the Beaufort Sea in 2005, and added Chukchi Sea leases in 2008. Since then, Shell has been pursuing permits from drilling regulators and the Environmental Protection Agency.

“Although the leases were issued to Shell, the government’s permitting and regulatory process has not been equipped to deliver,” David Lawrence, Shell’s executive vice president of exploration and commercial, said in remarks prepared today for a House Natural Resources Committee hearing in Washington. “This is highly unusual. The federal government’s decision to hold a sale is, in effect, a decision that outer continental shelf exploration and development is desired.”

The company has said it needed two years to prepare for drilling in the Beaufort Sea and was ready in 2007.

Shell filed two exploration plans last month to drill as many as two wells a year in the Beaufort Sea, where the leases expire in 2015, and as many as three a year in the Chukchi Sea from 2012 through 2013. Shell postponed exploratory drilling in the Beaufort Sea that was planned for this year after the EPA decision was taken to the agency’s Environmental Appeals Board, which sent the permit back on Dec. 30 for more review.

A bill that would remove the board’s authority over Alaska permits was approved today by the Republican-led House Energy and Commerce Committee, spokeswoman Charlotte Baker said in an e-mail.

The Beaufort and Chukchi seas are among “the most unique places of the planet” and oil exploration might pose a threat to polar bears and walruses, the Natural Resources Defense Council said.