Shell resurrects Alaska offshore drilling plans

ANCHORAGE, Alaska Wed May 4, 2011 6:18pm EDT

ANCHORAGE, Alaska May 4 (Reuters) - Oil producer Royal Dutch Shell Plc (RDSa.L) (RDSa.L) has resurrected an exploratory drilling program for Arctic waters off Alaska after earlier attempts were stalled by local opposition, litigation and fallout from the Deepwater Horizon spill in the Gulf of Mexico.

Shell plans to drill up to 10 wells in total in 2012 and 2013, mobilizing two offshore drill rigs to tap into leases in the Beaufort Sea off Alaska's northern coast and the Chukchi Sea off the northwestern coast, company spokesman Curtis Smith said Wednesday.

The company expects to submit the first of two formal plans of exploration to federal authorities in Anchorage by the end of Wednesday, Smith said.

The plan, to be filed with the Alaska office of the Bureau of Ocean Energy Management, Regulation and Enforcement, concerns the two wells Shell plans to drill each year in the Beaufort.

Another plan of exploration for the Chukchi Sea will be submitted in about a week, Smith said. That plan proposes three wells in 2012 and another three in 2013.

The new exploration program revives ambitious plans that the company first unveiled several years ago, after Shell began picking up significant offshore Alaska leases in 2005.

"It has been our plan all along to have a multi-well, multi-rig program beginning in 2012," Smith said. "It's just unfortunate that we haven't been able to carry out our smaller exploration program."

Shell had hoped to start drilling in the Beaufort as early as 2007, but a multi-year, multiple-well program was met by strong objections from residents and local government officials on Alaska's North Slope.

SCALING BACK PROPOSALS

Over successive years, the company scaled back its drilling proposals. It had applied for permission to drill at least one Beaufort well this year, but revocation of a key air-quality permit scrapped that plan.

Shell estimates that it has spent over $3.5 billion preparing to explore for oil in federal Arctic waters off Alaska, including $2.1 billion that the company paid for Chukchi leases in a record-breaking 2008 sale.

Environmentalists and Inupiat Eskimo residents of the North Slope have been wary of Shell's Arctic offshore plans and have, at times, successfully sued to block them.

In the past year -- after the massive BP (BP.L) Gulf of Mexico spill -- the U.S. government has taken a go-slow approach on approving Arctic offshore drilling, further delaying Shell's plans.

Federal waters of the Beaufort and Chukchi have been little explored in the past because of remoteness and high costs, but officials believe the areas hold significant oil and gas resources.

(Editing by Bill Rigby and Cynthia Osterman)

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