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Shell Requests Drilling Extension in Alaska, Surprises No One

Shell Requests Drilling Extension in Alaska, Surprises No One

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August 28, 2012

Shell’s arctic rigs, Kulluk (left) and Noble Discoverer (right), left a Seattle shipyard in late June unaware of the delays that lay ahead. Photo: Vigor

LONDON–Royal Dutch Shell PLC (RDSB.LN) has asked U.S. authorities for more time to drill in Arctic waters off the coast of Alaska after delays set back its planned summer exploration campaign, a person familiar with the matter said Tuesday.

“Shell have requested an extension of around two weeks,” said the person, adding that the company filed its request with the U.S. Department of the Interior late last week.

Federal authorities have imposed a Sept. 24 deadline for Shell to conclude its activities in the Chukchi Sea, an environmentally-sensitive Arctic region, based on estimates of when the short summer season ends and ice starts reforming.

Shell’s latest forecasting models suggest the winter ice will form later than expected, Shell Alaska Vice President Peter Slaisby was reported as saying by the Los Angeles Times.

Shell has placed big bets on its controversial U.S. Arctic oil exploration plans and its success there is an important part of its quest to find new hydrocarbon reserves. Shell has already spent around $4.5 billion to drill in the Arctic, becoming the first company in several years to explore for oil there.

The major Anglo-Dutch oil company had originally planned to commence operations in July, but delays in certifying a modified oil-spill response vessel have pushed back the start of drilling. The company has yet to receive final approval from the U.S. Coastguard for its re-tooled Arctic Challenger.

Shell now hopes to drill and complete two wells–one in the Chukchi Sea and one in the Beaufort Sea–this year. It had initially planned to drill five wells in 2012, although the company says it will start drilling additional bore holes that it can then complete in 2013.

-By Alexis Flynn. (c) 2012 Dow Jones & Company, Inc.

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