Shell seeks five more years for Arctic drilling

Royal Dutch Shell Plc is asking the Obama administration for five more years to explore for oil off Alaska’s coast, saying that setbacks and legal delays may push the start of drilling past the 2017 expiration of some leases, according to Bloomberg.

Offshore staff

HOUSTONRoyal Dutch Shell Plc is asking the Obama administration for five more years to explore for oil off Alaska’s coast, saying that setbacks and legal delays may push the start of drilling past the 2017 expiration of some leases, according to Bloomberg.

Shell, which has spent eight years and $6 billion to search for oil in theArctic’s Beaufort and Chukchi seas, said in a letter to the Interior Department that “prudent” exploration before leases expire is now “severely challenged.”

The Bloomberg report said that Shell’s plans to produce oil in the Arctic were set back in late 2012 by mishaps involving a drilling rig and spill containment system, and that the company has been sued by environmental groups seeking to block the Arctic exploration. Shell halted operations in 2012 to repair equipment and hasn’t resumed its maritime operations off Alaska’s northern coast.

The July 10 letter from the company seeks to pause Shell’s leases for five years. That would, in effect, extend the deadline to drill on its Beaufort and Chukchi leases.

Leases issued by the government for the right to drill for oil in the Arctic expire in 10 years unless the holder can show significant progress toward development.

Bloomberg says that Shell has left open the possibility of returning to Arctic drilling as soon as next year. However, in its letter, Shell said it needed certainty from the US before investing beyond the $6 billion that the company has already spent.

10/28/2014

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