Shell has tentative EPA OK for Alaska drill permit

ANCHORAGE, Alaska Fri Jan 8, 2010 12:36am GMT

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ANCHORAGE, Alaska Jan 7 (Reuters) - The U.S. Environmental Protection Agency on Thursday tentatively approved a key air-quality permit that would allow Royal Dutch Shell (RDSa.L) to conduct oil-drilling operations later this year in Alaska's Chukchi Sea.

The permit would allow emissions from the drilling ship and associated vessels that Shell plans to mobilize in the Chukchi during the summer and autumn open-water season.

A company manager said EPA's tentative approval was an important step for Shell, which is seeking to drill some of the Chukchi Sea leases that it paid $2.1 billion in 2008 to acquire.

"We very much appreciate the work done by EPA Region 10 to issue Shell a draft air permit for our 2010 Chukchi drilling program," Pete Slaiby, Shell Alaska's vice president, said in a statement.

"The issuance of this draft permit starts the clock on a critical timeline of events that will ultimately determine if we can explore our Alaska leases in 2010," he added.

The proposed permit has been hotly debated by some drilling supporters and opponents within Alaska, and it remains subject to an additional public-comment period that runs through Feb. 17. Continued debate could delay drilling past this year, Slaiby warned.

"While today's announcement is good news, the length of the public comment period combined with likely appeals still pushes the boundaries of our ability to drill in 2010," he said in his statement. "Obviously, the windows in which we have to operate are limited and a decision to move forward is an extremely expensive one. We will continue to monitor our options in the days ahead as we get closer to making that critical decision."

The company in December won conditional approval from the U.S. Minerals Management Service for its plan to drill up to three wells in the Chukchi. But the company still needs a specific drilling authorization from the MMS, along with a wastewater-discharge permit from EPA and various permits from other agencies, before it may conduct Chukchi operations.

The Chukchi is believed to hold 15 billion barrels of recoverable oil and 76 trillion cubic feet of natural gas, according to MMS estimates. However, only five exploration wells have even been drilled in the offshore region, all of them about two decades ago.

Shell also plans to drill two wells this year in the Beaufort Sea off Alaska's northern coast, where the company spent $83 million in 2005 and 2007 acquiring exploration rights.

That Beaufort plan received conditional approval from MMS in October, but EPA is still reviewing the associated air-quality and wastewater-discharge permits.

The Beaufort is believed to hold 8.2 billion barrels of recoverable oil and 27 trillion cubic feet of natural gas, according to MMS estimates. (Editing by Christian Wiessner)

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