A new chapter in U.S. oil exploration could open within days as Shell sails into seas north of Alaska, hoping to tap into a potential 90 billion barrels of crude that have beckoned for decades.
The company has been there before, drilling exploratory wells in the 1980s and 1990s that tantalized with promise of riches deep below the freezing Chukchi and Beaufort seas.
But a decade-long slump in oil prices depressed the value of the bounty. Crude from the Exxon Valdez tanker blackened Alaska’s coast, drawing worldwide scrutiny to the potential for oil-related environmental disaster – a prospect reinforced two decades later when a blown-out well in the Gulf of Mexico claimed lives and livelihoods there.
Now, Shell is close to getting back into the Arctic waters, after working seven years and spending $4.5 billion to meet new technical challenges, comply with new rules and assuage at least some fears of skeptical environmentalists and native Alaskans who say the exploration threatens a fragile ecosystem and a centuries-old way of life.
Shell awaits only a handful of federal permits to drill as many as three wells in its Burger prospect in the Chukchi Sea and two in the Sivilluq prospect in the Beaufort Sea. If there are no last-minute legal challenges, the work is expected to begin by the end of July.
Shell’s quest shows how hard an oil company will pursue the next potential domestic discovery. It also is a case study in U.S. regulation of offshore drilling in frontier areas after BP’s deadly 2010 Gulf of Mexico oil spill.
The company spent nearly half a billion dollars renovating two drilling rigs that have been docked in Seattle, poised to rendezvous soon with a flotilla of support vessels that the company and the government say will reduce the chances of disaster and increase Shell’s capability to respond to an emergency.