U.S. to allow Shell to begin prep work for drilling in Arctic

ANCHORAGE, Alaska/WASHINGTON, Thu Aug 30, 2012 – Royal Dutch Shell will be allowed to begin some “limited” drilling in Alaska’s Chukchi Sea, the U.S. government said on Thursday, a move the company hailed as a step forward in its long-delayed effort to tap Arctic oil.

The U.S. Interior Department said Shell will be permitted to begin preparatory work in the Chukchi, but cannot drill to areas containing oil until the government certifies its oil spill containment system.

Without that containment system, the department has said it will not allow Shell to drill for oil in the Arctic.

“At this point we don’t know what exactly is going to happen with Shell and whether they are going to be able to complete a well in the Arctic this year,” Interior Secretary Ken Salazar told a conference call with reporters.

Shell’s Arctic drilling plans had appeared on track to begin this year but it has run into delays. The company has spent $4.5 billion so far in its effort to explore for oil and gas off Alaska’s coast.

In addition to seeking modifications to its air-quality permits from the U.S. Environmental Protection Agency, Shell is also still working to get its oil-spill containment barge, the Arctic Challenger, approved by the Coast Guard.

Shell’s vice president for Alaska Pete Slaiby said the government’s decision to allow some drilling was “exciting”.

He said that even if Shell’s activities this year were limited to top-hole drilling, that would be an important accomplishment.

“This is really important to begin to establish confidence that we can do this right,” Slaiby told reporters in Anchorage.

“All this work on top holes is clearly going to help us, as well as put real wind in our sails for 2013.”

Facing delays, Shell has asked the government to extend its oil drilling season in the Chukchi beyond the September 24 deadline currently in place. Without an extension, the chances of completing a well this year are slim, Slaiby said.

ConocoPhillips restarts LNG exports from Alaska going to Japan

ANCHORAGE, Alaska, Thu Jun 14, 2012 – ConocoPhillips has resumed shipments of liquefied natural gas from its Alaska plant, an aged facility that was previously targeted for closure, a company spokeswoman said Wednesday.

The company sent a shipment of LNG last month to Japan, spokeswoman Natalie Lowman said.

ConocoPhillips expects to deliver four or five cargoes of Alaska LNG this year, all of them to Japan, Lowman said. However, she said she could not disclose the customer.

The plant, in the Kenai Peninsula community of Nikiski, is the only LNG export facility in the United States. It began operations in 1969, supplying LNG to Tokyo Gas and Tokyo Electric for most of its operating life.

In early 2011, ConocoPhillips and partner Marathon announced plans to close the facility, citing failure to strike a shipping contract with the Tokyo utilities and difficulties in securing natural gas supplies from the mature Cook Inlet basin.

But new demand for Alaska LNG emerged in the aftermath of Japan’s massive earthquake and tsunami last year that wrecked the Fukushima nuclear power plant.

ConocoPhillips in September bought Marathon’s 30 percent share in the plant and now has full ownership of the facility.

The LNG plant was closed over the winter. The May shipment was the first since last fall.

Plans for the LNG plant beyond 2012 are unclear, Lowman said.