Shell Delays Alaska Drilling To 2009 On Court Injunction

The Beaufort Sea. Photo by the US National Oceanic and Atmospheric Administration

By Benoit Faucon

LONDON -(Dow Jones)- Royal Dutch Shell PLC (RDSB.LN) is to delay an oil and gas exploration drilling program in Alaska until mid-2009 because a court injunction against the plans has yet to be lifted.

A spokeswoman said Sunday in an e-mail that because an Anchorage court of appeals has yet to rule on a regulatory approval of Shell's plans, "we have decided to forego our planned 2008 Beaufort Sea drilling program."

Last year, the Anglo-Dutch oil giant postponed the start-up of exploration after a legal challenge brought by environmentalists and indigenous groups led to a temporary court injunction against a regulatory approval.

The new delay underscores the difficult balancing act U.S. authorities face as they try to alleviate an oil supply crisis while at the same time respecting the demands of environmental protection.

Shell wants to explore the area to help replenish its hydrocarbons reserves and production numbers and leverage an experience in Arctic drilling gained in Russia's Sakhalin island. But like in Sakhalin, it has been criticized for entering an area needed by an endangered whale species.

The lack of final decision in the case "has delayed drilling for another year - extending the timeline it will take to bring this much-needed US production on-line," the spokeswoman said in an e-mail.

"In times of shrinking global supply, ever increasing reliance on imported oil and surging energy prices, the Alaska offshore could be a significant resource for national energy security," the e-mail added.

"We remain committed to this project for the long-term and we consider Alaska a future Heartland for Shell," it said.

But Doug Norlen, a policy director at plaintiff organization Pacific Environment, said the "proposed drilling area lies directly in the endangered bowhead whale migratory path."

Co-plaintiffs along with Pacific Environment include the North Slope Burrough, a municipal entity for the largely indigenous communities on Alaska's Northern coastal region, and the Alaska Eskimo Whaling Commission, an indigenous subsistence whaling charity.


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