Shell has to postpone Beaufort Sea drilling until at least 2012

Shell Alaska's announcement that it will not be drilling in the Beaufort Sea this year comes after a ruling that revoked federal permits to allow the drilling. The US Environmental Protection Agency ruled that more analysis is needed of nitrogen dioxide emissions from vessels that would be involved in the drilling operations. The ruling was in response to appeals from Native and conservation groups in Alaska.

Shell Alaska vice president Peter Slaiby said Shell’s decision to delay Beaufort exploratory drilling stemmed from “continuous regulatory delays.”

"We've been trying to [obtain] an air permit for five years . . . and now the continuous regulatory delays have forced us to make a decision to forgo drilling in 2011," Slaiby said, speaking with reporters from Anchorage. "Shell is ready to drill."

The air-quality permit is a key permit Shell needs to start drilling in the Beaufort and the Chukchi, Slaiby said. The company has said the air-quality permit is the last of about 35 permits the company needs to get started.

Royal Dutch Shell PLC has worked for 5 years and invested more than $50 million pursuing air permits to drill in Arctic waters off Alaska, he said. Nevertheless, Shell intends to continue to work with the EPA to deliver the required air permits by 2012.

Offshore Alaska is believed to contain reserves of up to 25 billion barrels of oil and remains a key long-term area of interest for the company.