Shell announced Thursday that it plans to drill offshore in the Chukchi Sea, between Alaska and Siberia, thereby putting to use billions of dollars worth of leases after years of problems and uncertainty, . The project will cost the Dutch oil giant nearly a billion dollars, mostly in various permits and the costs of keeping a fleet in such a remote location. Shell bought the Chukchi leases in 2008 but has yet to drill.
The decision comes on the heels of a string of setbacks for Shell and oil production in Alaska: Global oil prices are plunging, drilling contractor Noble Drilling was found guilty of committing various environmental and safety violations last year, and Shell鈥檚 Kulluk drill rig ran aground last year. At this point in 2014, Shell had abandoned its six-year effort to drill in the Chukchi region and remained uncertain about pursuing oil there even last month. Shell CEO Ben van Beurden told the Alaska Dispatch News that to make drilling profitable, Shell will have to make a major discovery or oil prices will have to change.
Shell鈥檚 Arctic endeavors come at a contentious time for energy development in the region, with the Obama administration recently 聽and now making additional areas of the and 聽Seas off-limits to drilling. Alaska leaders have been critical of Obama鈥檚 efforts to seek what his administration call a in the state鈥攑articularly of his decision to ban oil and gas drilling in Bristol Bay.
鈥淚t鈥檚 a one-two-three kick to the gut of Alaska鈥檚 economy,鈥 Senator Lisa Murkowski .
The Department of the Interior recently for offshore oil and gas leasing. It plans to make available nearly 80 percent of estimated oil resources in the region, but none in the Chukchi and Beaufort Seas areas, which were already off-limits under previous leasing plans. Shell鈥檚 lease is situated just outside the protected zone.