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US govt sees no urgency among Arctic offshore drillers for 2014

Wed, 04th Sep 2013 04:23

By Yereth Rosen

ANCHORAGE, Alaska, Sept 3 (Reuters) - Oil companies appearin no hurry to return in 2014 to the ice-choked federal watersoff Alaska where Royal Dutch Shell's explorationefforts foundered last year, the new head of the U.S. InteriorDepartment said on Tuesday.

Interior Secretary Sally Jewell, who took up the post inApril, said that in meetings with the industry on her firstofficial visit to Alaska she heard no sense of "urgency."

"I have not heard from any companies an urgency to goforward until they're ready and they are confident they can doit in a safe and responsible way," she said in a newsconference.

Shell, which has spent about $5 billion to date on itsArctic offshore program, including $2.1 billion paid for leasesin the Chukchi Sea in 2008, in February announced a "pause" inthose efforts after struggling with various equipment problems.

The grounding of its Kulluk drillship in a storm prompted aDepartment of Interior review and the launch of Arctic-specificstandards for all drillers in federal waters of the Beaufort,the Chukchi and in areas of transit to and from drill sites.

The baseline Arctic standards should be ready by the end ofthe year, Jewell said. "That would give companies an opportunityto determine whether they want to do anything next summer."

She added that she believes the industry remains keen onprospects in the Chukchi and Beaufort Seas, despite competitionfor investment from cheaper shale-oil projects in the Lower 48states.

Shell has not yet settled on its Alaska plans for next year,company spokesman Curtis Smith said on Tuesday.

"Future exploration plans for offshore Alaska will depend ona number of factors, including the readiness of our rigs and ourconfidence that lessons learned from our 2012 drilling programhave been fully incorporated," Smith said in an email.

ConocoPhillips, the other company with a detailedexploration plan for U.S. Arctic waters, in April dropped itsplan to drill in the Chukchi in 2014 and was reevaluating itsprogram. It has not yet made any decisions about future offshoreArctic development, said spokeswoman Natalie Lowman.

Other companies with offshore Arctic leases include Statoil, Eni and Repsol, but they have notfiled any formal exploration plans with federal regulators.

While there was no drilling this summer in the offshoreArctic, there has been some industry activity there, includingmarine surveys in the Chukchi by Shell.

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