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Shell Gambles Billions in Arctic Alaska Push

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At any rate, Shell says the well was never out of control and that oil ultimately was trapped between two points in the pipeline as intended.

"Shell transports over 2 billion barrels of oil and gas through sub-sea pipelines annually, and we expect every ounce of that oil to reach its intended destination," Shell said in a written response to questions from McClatchy Newspapers. When it doesn't, the company is fully responsible for cleaning it up, Shell said.

The company insists the North Sea incident doesn't foretell what might happen in the Alaska Arctic.

Shell set its sights anew on Alaska in 2005, buying up leases in the Beaufort Sea and expanding its holdings there two years later.

Then, in 2008, Shell left no doubt it wanted to be a major player, paying $2.1 billion to the federal government for Chukchi leases the second time around. Now it owns the rights to more than 2 million acres in the seas off Alaska's northern coast, far more than any other explorer.

But it has not yet been able to drill. It still needs additional permits. Environmental organizations, with support from some Alaska Native communities, have sued at every turn.

Shell now aims to begin its exploration in mid-summer 2012, during the open water season.

Technology has advanced over the decades to lessen the risk of drilling, and oil production, in the Arctic, Shell scientists say. And, they say, blowouts are unlikely here.

"The Arctic wells are really straightforward wells with few challenges on executing them," said Williams, the chief well scientist for Shell. "They are in shallow water. They are at low pressure, and they have what we call a margin. It gives you a lot of room to operate."

Before Shell drills a well, a team of engineers and operators plans it out step by step and evaluates what could go wrong and how to prevent it.

"The last one we do, we call 'drill the well on paper,' " Williams said.

If part of the spill prevention system breaks down, work must stop until a backup is in place, he said.

"It all fits into what we call safety culture," Williams said. "It's where people ... make the right decision at the right time."

Shell says it was the first major oil company to staff an operations center that monitors drilling as it happens -- 24 hours a day, seven days a week -- in high-risk and high-stakes situations. If the company is able to develop fields off Alaska, Shell said, it plans to build a satellite center in the state.

The company is pushing its safety message hard. It paid to air a 30-minute, documentary-style program entitled "Arctic Ready" in prime time, on Nov. 20 on Alaska's KTUU-TV NBC affiliate.

For years, Shell has worked to build relationships with Alaska villages along the Chukchi and Beaufort seas to give residents confidence in its ability to handle trouble, Slaiby said. The company has held hundreds of meetings in Barrow, Alaska, and the seven surrounding villages, according to Shell's count. Shell Oil President Marvin Odum, the company's top executive in the Americas, came to a number of them.

Shell put a half-million dollars into a fund for villages and didn't dictate how the money had to be used, said Dennis McMillian, who coordinates the effort as chief executive of the Foraker Group, which helps nonprofit organizations. Much of the money was spent on equipment like computers and fax machines.

Bessie Kowunna is a Point Hope, Alaska, villager who works for Shell as a community liaison officer.

"It's the first time we're dealing with an oil company here. And a lot of our hunters and our whalers -- they bring up this oil spill, what if it happens and ruins our hunting. Because we depend on the hunting and the harvest of the bowhead whale every spring, just this circle of life, how we catch our food from the ocean," Kowunna said.

She said some residents are upset she works for the oil company.

"My response is -- I'm not drilling out there. I'm an in-between person to let you know what is going on," she said.

Environmentalists say more research needs to precede any drilling. Too little is known about the science of the ocean there, they say. What about an oil spill under ice? What about studies that show problems with cleanup during periods of broken ice?

Shell's oil spill contingency plan is one of the best, but if a disastrous spill happened in the remote Arctic, maybe 3 percent of the crude could be cleaned up, estimated Steiner, the former university professor who now works as an environmental consultant.

Shell maintains otherwise.

"Our whole philosophy has been, in the Arctic, we are remote -- we've got to contain any oil close to the source literally as quick as we can," Slaiby said.

Tapping the Arctic's resources takes big money, operational expertise and advanced technical know-how, he said. "I think there's probably only a handful of companies that can do what we're doing right now."



Source: (c) 2011 the Anchorage Daily News (Anchorage, Alaska) Distributed by Mclatchy-Tribune News Service.


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