Time almost up for Shell to begin Arctic drilling

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The Independent Online

Shell is racing to begin a massive drilling campaign in US Arctic waters before they freeze over and postpone activities by a year.

The FTSE 100 oil company has invested about $4.5bn (£2.9bn) over the past seven years and fought off more than 50 lawsuits, including from environmentalists and indigenous Alaskan groups, in its controversial attempt to access the US Arctic's vast oil reserves in the Chukchi and Beaufort seas. It had hoped to begin exploratory drilling in July off the coast of northern Alaska.

But delays in securing certification for its giant spill-containment barge, the Arctic Challenger, mean Shell has already missed that deadline and concerns are mounting in the City that if the vessel is not authorised this week the company will miss its chance to begin drilling this year. "I'm starting to think it won't happen this year," said Andrew Whittock, an analyst at Liberum Capital.

Iain Pyle, an analyst at Sanford C Bernstein, added: "We're at a crunch time. I don't know exactly how much time they need but we're at a point now where it's looking like it might not happen this year. And any wells they do begin drilling they will really want to complete. There is no point in starting a well this year, plugging it, and finishing it off next year. That will only add to the cost."

Shell has converted the 300ft Arctic Challenger to comply with heightened safety requirements imposed by the US in the wake of BP's Gulf of Mexico oil spill in 2010. But the US Coast Guard still believes there are deficiencies in the barge's safety systems.

A Shell spokeswoman said the company expected to have everything mended by the end of the month.

Analysts said it typically took between two weeks and a month to drill an Artic well, while it is expected to take between two and three weeks to sail the Artic Challenger from Bellingham to northern Alaska, meaning any drilling would be unlikely to commence much before mid-September, at the earliest.

A Shell spokeswoman said: "Our goal remains to drill and complete as many wells as time will allow this open-water drilling season."

Shell's permits mean it can only drill between July and 24 September in the Chukchi sea, when the amount of ice makes it difficult to work – and to clean up any oil spills.