Shell pauses Alaska drilling program

Royal Dutch Shell plc today announced it will pause its exploration drilling activity for 2013 in Alaska's Beaufort and Chukchi Seas to prepare equipment and plans for a resumption of activity at a later stage.

"We've made progress in Alaska, but this is a long-term program that we are pursuing in a safe and measured way," said  Marvin Odum, Director, Upstream Americas.  "Our decision to pause in 2013 will give us time to ensure the readiness of all our equipment and people following the drilling season in 2012."

Shell's drilling units Kulluk and Noble Discoverer experienced a string of problems that included the grounding of the Kulluk after the drilling season. In January, Secretary of the Interior Ken Salazar launched what he called "an expedited, high-level assessment" to "pay special attention to challenges that Shell encountered in connection with certification of its containment vessel, the Arctic Challenger; the deployment of its containment dome; and operational issues associated with its two drilling rigs, the Noble Discoverer and the Kulluk." The U.S. Coast Guard also announced that it had initiated a comprehensive marine casualty investigation of the Kulluk grounding.

Shell said today that it had completed top-hole drilling on two wells in 2012 in the Beaufort and Chukchi Seas, marking the industry's return to offshore drilling in the Alaskan Arctic after more than a decade.

"This drilling was completed safely, with no serious injuries or environmental impact.  After the drilling season ended, however, one of Shell's drilling rigs, the Kulluk, was damaged in a maritime incident related to strong weather conditions," said Shell. "The Kulluk and the second drilling rig, the Noble Discoverer, will be towed to locations in Asia for maintenance and repairs."

The company says that Alaska remains an area with high potential for Shell over the long term, and that the company is committed to drill there again in the future. If exploration proves successful, resources there would take years to develop.

"Shell remains committed to building an Arctic exploration program that provides confidence to stakeholders and regulators, and meets the high standards the company applies to its operations around the world," said Mr. Odum. "We continue to believe that a measured and responsible pace, especially in the exploration phase, fits best in this remote area."