By Yereth Rosen
ANCHORAGE, Alaska, April 10 ConocoPhillips
shelved plans to drill exploration wells in the Chukchi
Sea off Alaska next year due to U.S. regulatory uncertainty, a
month after the company said it would press ahead with drilling
In another major step back from drilling in Arctic waters
near the state, ConocoPhillips said on Wednesday it would not be
prudent to invest in the Chukchi Sea now because of "evolving"
federal regulations and permit standards, and it was unsure
whether it would even be ready by 2015.
"We really don't know yet," said spokeswoman Natalie Lowman.
She said the company wanted to better understand the
requirements from the government and other leaseholders before
deciding. "We're not putting a timeline on it."
Conoco's decision follows Royal Dutch Shell Plc's
announcement in February that it would not drill in Alaska's
Arctic seas this year after a 2012 season that culminated in the
grounding of its drillship in a storm.
Just over a month ago ConocoPhillips said it was still
planning two exploration wells in the Chukchi Sea next year,
reassuring the public that the situation would be different from
In 2008, Conoco was awarded 98 exploration lease tracts in
the Chukchi Sea. Previously, it held leases in the Beaufort Sea
but has let those lapse, Lowman said. Shell had started drilling
in both Arctic seas.
Conoco had spent about $500 million in the U.S. Minerals
Management Service's record-setting 2008 lease sale, second only
to Shell's $2.1 billion.
"Companies can't be expected to invest billions of dollars
without some assurance that federal regulators are not going to
change the rules on them almost continuously," said Lisa
Murkowski, a Republican senator for Alaska.
The Devils Paw prospect, which Conoco had hoped to drill in
2014, also had minority partners Statoil and OOGC, a
unit of China National Offshore Oil Company.
Houston-based Conoco will pursue the rest of its Alaska
plans, including development of the CD-5 field, which is
expected to be the first producing oilfield in the National
Petroleum Reserve-Alaska on the western North Slope.
"We're still on track for first oil at the end of 2015,"
Senator Mark Begich, a pro-drilling Alaska Democrat, said he
was disappointed after spending four years working with the
administration and industry to promote development of the
Chukchi and Beaufort seas.
Yet groups seeking to stop or at least slow down Arctic
offshore development applauded Conoco's decision.
"We agree that the industry and federal government needs
more time to figure out what the next steps should be," Cindy
Shogan, executive director of the Alaska Wilderness League, said
in a statement. "The risks associated with drilling in the
pristine Arctic Ocean are just too great."
Marilyn Heiman, director of the Pew Charitable Trusts' U.S.
Arctic program, said that more time was needed to develop safety
and oil spill prevention and response standards to protect the
ecosystem and local communities.
But Rebecca Noblin, Alaska director at the Center for
Biological Diversity, said there was "no safe way to drill for
oil" in that particular environment and called on the U.S.
government to take the opportunity to stop it.
The U.S. government is certainly having a very close look.
Last month, it emerged that a fourth government probe was under
way into Shell's 2012 season - this time for possible violations
of international marine environmental rules.