Shell moving toward Alaska exploration project: Shell proceeds with patience after Alaska lease sale.

• Author: Orr, Vanessa
• Position: Oil & Gas

On March 30, 2005, the Royal Dutch/Shell Group bid more than $44 million for rights to explore for oil and gas in the Beaufort Sea. Despite this sizable commitment to re-enter the Alaska market where it was once a major player, the company is taking its time moving into the Last Frontier.

"In time, Shell will likely have a presence in Anchorage, but we have not made a final decision," explained Kelly op de Weegh, senior external affairs representative, Shell Exploration & Production Co. "We will make an appropriate announcement once that decision has been made."

FOUR DECADES OF PRESENCE

Shell originally came to Alaska in the 1950s, but after four decades chose to pull out of the area after its North Slope discoveries proved disappointing and did not meet the company's investment criteria. The company chose to re-enter the market this year in a big way, becoming the top bidder on 86 blocks in the Mineral Management Service's (MMS) Beaufort Sea oil and gas lease sale, which garnered a total of 121 bids from a number of companies, including Shell, Armstrong Alaska, ConocoPhillips Alaska and North American Civil Recoveries Arbilrage Corp. The sale brought in $46.7 million for more than 618,000 acres.

"Bidding alone, Shell was the apparent high bidder on all 86 blocks on which it bid," explained op de Weegh of the $44.4 million investment. "Upon review of those bids by the MMS, we will move into the evaluation phase of the project. This will begin with a permitting process, during which we intend to ask for input from stakeholders in the area."

According to op de Weegh, local stakeholders' concerns will be addressed regarding the potential impacts of Shell's operations. "We will work to minimize these impacts in the development decisions that we make," she said. "In addition, protecting the environment and local species, including marine mammals, is part of Shell's overall commitment to sustainable development."

WORK BEGINS SUMMER OF 2006

Depending on the permitting process, op de Weegh says that the earliest estimate for seismic shooting in the Beaufort Sea will be the summer of 2006, and Shell will likely seek a joint venture partner for the project.

Though Shell's interest in Alaska has waned in the past, op de Weegh says that the company has continued to review opportunities in the state in its quest to grow globally through oil and gas exploration. "Shell is committed to grow its...