Shell Looks For Arctic Approvals

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Royal Dutch Shell, Europe's largest oil company, is expected to present a proposal to federal regulators this week in an effort to move forward with plans to drill as many as 10 exploratory wells in the Beaufort and Chukchi Seas in the Alaskan area of the Arctic Circle.

Shell (RDS-A) had hoped to commence drilling for the Alaskan wells this year, but the start date for the project was pushed back following the Gulf of Mexico oil spill in April 2010. Shell's Alaska plans fell under the purview of the Obama Administration's moratorium on deepwater drilling, which was implemented following the Gulf spill.

Shell has already spent $3.7 billion on the 10-year offshore leases and preparations for exploration despite not drilling a single hole, the New York Times reported. The company could begin drilling sometime in 2012 if regulators approve the plan and Shell's safety procedures.

Shell faces the hurdle of convincing the Interior Department it could contain a massive spill in the Arctic region that potentially be comparable to the Gulf spill. An Interior Department agency recently estimated that a ''hypothetical'' blowout of an oil well in the Chukchi Sea could release 1.4 million barrels of crude over a 39-day period before a relief well could be drilled, the Times reported.

Alaska's oilfields have been maturing and production has been in steady decline in recent years, but the state's Arctic region is believed to hold 25 billion to 27 billion barrels of reserves making it a highly sought after destination for oil producers.