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Summer Marches Relentlessly Onward While Shell Faces Further Delay to Arctic Drilling Campaign

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July 10, 2012

Members of Royal Dutch Shell’s well delivery group, along with members of BSEE, witness the deployment of an emergency capping stack which will be ready for use along with Shell’s offshore Alaska drilling operations. Image: SHELL

LONDON–Royal Dutch Shell PLC’s (RDSB.LN) controversial plan to drill for oil in waters off Alaska’s Arctic coast faces delays as the company races to get final Coast Guard approval of its vital oil spill response vessel.

Shell initially planned to begin its campaign to explore for oil in the Chukchi and Beaufort Seas in July. However, the company said Tuesday it is still working with U.S. officials to ensure that an essential oil spill response vessel is adequately prepared for the unique conditions it will face.

These fresh challenges highlight the difficulty Shell has faced exploring for oil offshore Alaska since BP PLC’s (BP) Gulf of Mexico oil spill in 2010 prompted much higher scrutiny from regulators and environmental groups.

“Shell’s designated oil spill containment barge, the Arctic Challenger, is currently undergoing a series of inspections to ensure its readiness for deployment to Alaska,” said a Shell spokesman.

Two Shell-chartered drilling ships already began their journey from Seattle to Alaska late last month.

The issue is made more pressing by the fact Shell has a narrow seasonal window in which Arctic exploration drilling can be conducted.

By September, advancing winter sea ice can limit activities. For example, in 2010 Scottish exploration firm Cairn Energy PLC (CNE.LN) was forced to plug half-finished wells it was drilling in similar conditions offshore Greenland, when delays caused mainly by geological factors pushed its tight schedule to the limit.

Shell said that it was working closely with the Coast Guard to define the operational and mooring standards of what is a “first-of-its-kind system” that isn’t yet mandated by regulation.

“We have every confidence the Arctic Challenger will achieve the certifications necessary and that it will be available in the Arctic in 2012,” said the Shell spokesman.

Separately, environmental campaigners Monday filed a lawsuit in Anchorage seeking to challenge the federal government’s decision to approve Shell’s oil spill cleanup plans. The action is one of several by ecological groups opposed to the Anglo-Dutch giant’s upcoming operations.

Although the Arctic is seen as a major untapped hydrocarbon resource, critics fear that a well blow out and oil spill, like the one that occurred on the BP-leased Deepwater Horizon drilling rig in 2010, would be almost impossible to clean up and would risk permanently damaging a fragile ecosystem.

“We remain confident that the approval of our oil spill response plans will withstand any legal review,” said the Shell spokesman. “These approvals are testament to the huge amount of time, technology and resources we have dedicated to an Arctic oil spill response fleet that is second to none in the world.”

“If we were not absolutely confident that we could execute a responsible exploration program, we would not be here,” the spokesman added.

– Alexis Flynn, Dow Jones Newswires

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