Shell Start of Arctic Oil Drilling Slipping to August

Royal Dutch Shell Plc (RDSA)’s drilling off Alaska’s north coast will be delayed until August as the company waits for ice to clear and modifies a spill-response vessel to meet U.S. Coast Guard requirements.

“Our largest impediment to time of drilling is persistent sea ice,” said Curtis Smith, a spokesman for The Hague-based company. “We’ve moved our estimation from late July to potentially the first week of August.”

The company will use the delay to complete renovating a barge called the Arctic Challenger to add oil-recovery equipment that will be deployed in the event of a well blowout.

The company, which has spent almost $5 billion in Alaska, plans to drill as many as five wells this year. Shell’s plans to tap resources in the Chukchi and Beaufort seas, estimated to have more than 20 billion barrels of oil, have been thwarted by environmental groups and native Alaskans who oppose drilling, citing the risks of an oil spill and air pollution.

The Coast Guard said today the barge has deficiencies in fire-fighting and electrical systems that must be corrected before getting a permit. The company plans to comply with the requirements, John Haney, Shell project development and construction manager, said today in a telephone interview.

Shell is seeking to classify the barge as a mobile platform, rather than as a vessel anchored in one place and unable to clear out in case of storms. The change would better match the type of operations intended for the barge, he said.

A fleet of vessels, led by the Kulluk and Noble Discoverer, departed Seattle en route to Dutch Harbor, Alaska, last month in preparation for the exploratory work, Shell said in a June 27 statement. The barge, operated by Superior Energy Services Inc. (SPN), remains in a shipyard in Bellingham, Washington, the Coast Guard said.

Besides the Coast Guard certificate, Shell has to obtain a final permit from the Interior Department’s Bureau of Safety and Environmental Enforcement.

To contact the reporters on this story: Katarzyna Klimasinska in Washington at kklimasinska@bloomberg.net; Carol Wolf in Washington at cwolf@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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