Shell's Arctic offshore drilling suffers setback

Associated Press Modified: September 17, 2012 at 9:30 pm •  Published: September 17, 2012
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ANCHORAGE, Alaska (AP) — Shell is limiting Arctic drilling off Alaska to just preparation work this year after suffering several setbacks, but the company says it remains optimistic about the project's prospects.

Netherlands-based Royal Dutch Shell PLC said earlier Monday that a containment dome required to be in place before drills can enter oil-bearing rock in the Chukchi and Beaufort seas was damaged Saturday during testing off Bellingham, Wash.

Environmental groups quickly blasted the company, saying the latest setback and others are evidence the oil industry cannot safely drill in the Arctic.

Marvin Odum, president of Shell Oil Co., Royal Dutch Shell's U.S. subsidiary, told The Associated Press that although the company no longer plans to drill deep enough to reach oil this year, it has made great strides with its exploratory wells off the Alaska coast.

"That drilling is going to be limited to top holes, but that is a tremendous step forward in terms of this multiyear exploration program in the Alaska Arctic," Odum said.

The dome and Shell's oil spill containment barge, the Arctic Challenger, are required to be positioned near the company's drill ships before they drill into hydrocarbon zones.

Shell already faced a rapidly closing window for drilling during the open-water season — when the seas are mostly free of ice — and the damaged dome was the clinching impediment.

Odum would not speculate on the cause or extent of damage.

"There is an investigation going on right now to actually put the details behind it," Odum said. "I'm going to wait for that report, which shouldn't take very long."

Shell hopes to tap into federal estimates of 26 billion barrels of recoverable oil and 130 trillion cubic feet of natural gas in U.S. Arctic waters. Odum remains optimistic.

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