ConocoPhillips on track to drill in Arctic waters next year

ANCHORAGE, Alaska, March 7 Thu Mar 7, 2013 11:45pm EST

ANCHORAGE, Alaska, March 7 (Reuters) - ConocoPhillips plans to drill up to two exploration wells in remote Arctic waters next year and is undeterred by numerous setbacks suffered there by rival Royal Dutch Shell Plc, a Conoco official said Thursday.

The oil major is targeting a prospect called Devils Paw in the Chukchi Sea, Mike Faust, the Chukchi program manager, said at the National Oceanic and Atmospheric Administration's (NOAA) annual Arctic Open Water Meeting.

ConocoPhillips' exploration plan is under review by the Bureau of Ocean Energy Management, and the company expects to submit additional information next week, Faust added.

The Chukchi, off northwestern Alaska, is where Shell began drilling its Burger prospect in a season abbreviated by permit problems, floating ice interference and vessel mishaps. Shell also started drilling a well in the Beaufort Sea off northern Alaska.

Shell announced last week it would skip drilling in 2013 so it can improve its equipment, including a drillship damaged in a Dec. 31 grounding in the Gulf of Alaska and another that needs repairs to be allowed back into Arctic waters. Both vessels are bound for Asian shipyards.

Faust said ConocoPhillips would take Shell's experience into account, but said there were key differences between their respective Arctic efforts.

Devils Paw is farther south in the Chukchi than Shell's prospects, so ConocoPhillips' operations will be in an area where sea ice melts earlier in the spring and forms later in the fall, meaning a longer open-water season in most years, he said.

ConocoPhillips also plans to use a jackup rig, with legs that will rest directly on the sea floor, rather than a mobile drillship like the two used by Shell.

The rig ConocoPhillips will deploy is being built by Noble and will be designed for extreme weather conditions, Faust told the NOAA meeting. "We're not going to bring up a 30-year-old piece of equipment," he added.

Shell's drillships are decades old, and refurbished for Arctic conditions.

The Kulluk, which is grounded, is owned by Shell and was used in the Beaufort, while Noble-owned Discoverer operated in the Chukchi under contract. Both racked up several air-quality violations, and the Discoverer was cited by the U.S. Coast Guard for 16 safety and environmental deficiencies now being investigated by the Justice Department.

Alaska Native leaders at the NOAA meeting said they were skeptical about ConocoPhillips' ability to avoid ice hazards and control pollution and noise that would disturb marine mammals.

Even the name is bothersome for an "area we use for resources," said Harry Brower, head of the Alaska Eskimo Whaling Commission. "Devils Paw - that's kind of insulting," he added.

Faust said the rig would be able to pull out of the area quickly if ice conditions became dangerous. He promised that ConocoPhillips would consult with Inupiat Eskimo residents to avoid conflicts, and cited a long history in Arctic Alaska.

As for the name, it came from a mountain peak in the Wrangell Range of eastern Alaska, he added.

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