Shell Remains Positive On Arctic Drilling

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Royal Dutch Shell, Europe's largest oil company, remains optimistic in its outlook for drilling in the Chukchi Sea off Alaska's coast, but Shell Oil President Marvin Odum reiterated that his company is disappointed that it has taken so long to move forward with exploratory drilling.

Shell (RDS-A) had planned to start drilling in the Chukchi Sea this year, but those plans were delayed when the U.S. government imposed a moratorium on deepwater drilling following the Gulf of Mexico oil spill in 2010. The company has already spent $2.1 billion Chukchi leases, but has not commenced drilling in the region due to regulatory delays.

Estimates indicate there are 26.6 billion barrels of recoverable oil and 130 trillion cubic feet of natural gas in the Alaska outer continental shelf, almost four times annual U.S. oil consumption and five times the country's yearly natural gas consumption, according to the Associated Press.

Earlier this year, Shell said it hoped to be drilling in Chukchi by 2012, stating that it needs to drill exploratory wells to learn how much in recoverable reserves are available in the area.

In Alaska, regulatory hurdles are not the only issue Shell has to contend with. Environmental groups have opposed Chukchi drilling on the grounds exploration there would threaten wildlife there and that a spill in the area could be worse than the Gulf spill because of the area's remoteness and harsh temperatures.