Shell secures conditional approval for Arctic drilling plan

Royal Dutch Shell has moved a significant step closer to be able to drill in the Arctic seas north of Alaska this summer, after receiving conditional approval for its multiyear exploration plan from the US regulator.

The decision puts Shell on course to drill two wells this year in the Burger prospect in the Chukchi Sea off the northwest coast of Alaska, starting on around July 15.

The Bureau of Ocean Energy Management, the US regulator, said on Monday afternoon it had accepted Shell's plan to drill up to six wells in the Burger prospect after concluding that the programme "would not cause any significant impacts" to the environment.

The decision is subject to Shell securing remaining approvals covering the potential effects on whales, seals walruses and polar bears, as well as permission to discharge waste water and specific permits for the two wells the company plans to drill this summer.

Shell described the decision as "an important milestone" that signalled "the confidence regulators have in our plan."

Susan Murray, deputy vice-president of Oceana, the environmental group, condemned the US government for having "rushed to approve risky and ill-conceived exploration in one of the most remote and important places on Earth."

Arctic sea ice is less extensive this year than in 2012, when Shell last attempted to drill in the area, meaning that the two rigs it plans to use should be able to move into position through the Bering Strait in the first half of July, earlier than in that previous programme.

Companies including Statoil of Norway and Chevron of the US have been delaying Arctic exploration as they attempt to save cash under pressure from the weak oil prices.

Any discoveries would probably not come into production until after 2020, by which time prices may have recovered, but some analysts argue that competition from shale production in the US and elsewhere will make Arctic oil uneconomic for a long time to come.

Shell's plans to explore the region have so far cost almost $7bn without yet being able to drill a single well to its target depth.

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The company's executives believe the Burger prospect, identified based on wells drilled in the area from 1989-91, could potentially hold very significant oil reserves.

However, the plan to drill in the Arctic has been fiercely criticised by environmental campaigners, who have used a series of law suits to slow the company's progress for much of the decade since it started acquiring drilling leases in the Arctic waters off Alaska in 2005.

Shell has suffered a series of incidents in pursuing its drilling campaign, including the grounding of its rig the Kulluk on an island off the south coast of Alaska on New Year's Eve 2012, when its tow cable broke in heavy seas.

Marissa Knodel, a climate campaigner for Friends of the Earth, described Shell's proposed programme as "the largest, loudest and dirtiest exploration plan ever proposed in the American Arctic Ocean"

She added: "Interior's approval of this plan is unconscionable given that the latest science says Arctic oil must be kept in the ground in order to have a chance at keeping the planet safe."

Shell said that while waiting for its remaining permits it would "continue to test and prepare our contractors, assets and contingency plans against the high bar stakeholders and regulators expect of an Arctic operator."

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