Shell Oil to start drilling in the Beaufort Sea

Shell Oil Company is to start drilling a dozen wells in the Beaufort Sea opening up a new frontier for the oil & gas industry.

For more than a decade, Shell Oil Company has been preparing one of its biggest explorations in the Arctic Ocean, off the Alaska Coast, which could very well become a new frontier for the oil & gas industry. Shell is expected to start a controversial 3 year drilling program in August. It is expected to start drilling a dozen wells in the Beaufort sea, with a small armada of drilling ships, about 30 miles off the Alaska coast.

Some industry experts have speculated it could spark a rush into one of the biggest untapped energy reserves. It is believed that the Beaufort Sea contains eight billion barrels of oil and nearly 30 trillion cubic feet of gas. The US Minerals Management Service gave Shell Oil Company the green light for the venture in February, despite fierce opposition from local communities and environmentalists.

BP already operates the North Star field on the coastline of Alaska's North Slope (Shell Oil Company's exploration activity is 20 to 30 miles closer to the Arctic fringe); if drilling proves successful it is expected that Repsol of Spain, Norsk Hydro of Norway and Conoco-Phillips of the US will follow Shell.

While there has been drilling and exploration in the Arctic, some experts claim that 25 percent of the world's undiscovered hydrocarbons sit in the Arctic. Even if that is optimistic, according to Malcolm Brinded, Shell Oil Company's chief executive of exploration and production, "If it's half right, then it's worth exploring because it has the right ingredients to be a good energy play and the world needs some new energy plays."

Shell Oil Company plans to start with the Beaufort prospect called Sivulliq, which contains a known oil pool, estimated to contain 100 million to 200 million barrels of technically recoverable oil, which was formerly known as the Hammerhead, and drilled by Unocal in 1986 & 1986. However, the oil pool has not been fully delineated.

With recent near record oil & gas prices, and with new and improved technologies, after Shell Oil Company and other major left the region in the 1990's, the huge potential of Alaska's Arctic waters is now economical to drilling.