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UPDATE 2-U.S. approves Shell's plan to drill for oil in Arctic

Mon, 11th May 2015 20:13

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By Timothy Gardner

WASHINGTON, May 11 (Reuters) - Royal Dutch Shell's return tooil drilling in the U.S. Arctic for the first time since 2012took a big step forward on Monday when the Obama administrationapproved the company's exploration plan.

The Department of Interior conditionally approved Shell'splan to explore for oil in the Chukchi Sea off Alaska. Shell hasalready spent about $6 billion on exploration in the Arctic.

The Arctic is estimated to contain about 20 percent of theworld's undiscovered oil and natural gas, but its recovery couldbe decades away.

Shell proposes to drill up to six wells in water about 140feet (40 meters) deep, using two vessels that can serve asrelief-wells for each other in case of an emergency.

"We have taken a thoughtful approach to carefullyconsidering potential exploration in the Chukchi Sea," saidAbigail Ross Harper, the director of the Bureau of Ocean EnergyManagement, in a release.

As part of the conditional approval, Shell must obtain permits from the federal government and the state of Alaska inorder to begin drilling this summer. Shell has not drilled inthe Arctic since a mishap-filled 2012 season, when the companywas forced to evacuate its Kulluk drill rig, which eventuallyran aground. (http://reut.rs/1cqzAl9)

One of the vessels that Shell plans to use this summer, theNoble Discoverer, also had problems in the harsh Arctic watersin 2012. At one point it had to be towed to port afterexperiencing vibrations in a propeller shaft.

The incidents did not lead to any oil spills, but theycreated a public relations headache for the company.

Several environmental groups are concerned about drilling inan harsh, pristine region with little capacity for emergencyresponse. "Our government has rushed to approve risky andill-conceived exploration in one of the most remote andimportant places on Earth," said Susan Murray, an official atOceana, a leading voice against Arctic drilling.

Even if Shell gets all the permits it needs, its Arcticaspirations may face a hurdle further south. Last week, the cityof Seattle ruled that its port must apply for a permit to allowShell to make it a hub for drilling rigs headed to the Arctic.

(Reporting by Timothy Gardner; Editing by Bill Trott and SteveOrlofsky)

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