Arctic ice-breaker: the MMS hawked blocks in the Arctic Chukchi Sea off Alaska today
Shell waves $105m for Chukchi block
Anglo-Dutch supermajor Shell bid $105.3 million for a single exploration block in today's sale of federal drilling rights in the Chukchi Sea off Alaska's north-western coast.
The bid was the highest dollar amount offered for a single tract in a record-breaking offshore lease sale, the US government’s Minerals Management Service (MMS) said.
The offer was also one of the largest-ever for drilling rights in federal waters off Alaska since the late 1970s when some federal acreage in the adjacent Beaufort Sea attracted bids of more than $100 million, MMS spokeswoman Robin Cacy said.
Shell, the most active bidder in the record-breaking sale, offered $2.1 billion in total high bids for 275 tracts, according to preliminary results released by the MMS.
The second-biggest spender in the sale, US supermajor ConocoPhillips, put up $506.4 million in high bids, Reuters reported the preliminary results showed.
Norway's StatoilHydro and Spain's Repsol were also active bidders.
The MMS said it had raised a record $2.66 billion in today's sale.
The federal government has estimated it would receive only $67 million for the acreage, said MMS Director Randall Luthi, who traveled from Washington to attend the sale.
The MMS believes up to 15 billion barrels of recoverable oil reserves and 77 trillion cubic feet of recoverable gas reserves lie beneath the Chukchi Sea.
The auction of 5355 exploration blocks covering 29.7 million acres, 25 to 50 miles (40 to 80 kilometres) offshore, has been opposed by environmentalists who say too little is known about the possible impact of drilling on populations of polar bears and walruses in the area.
Allegations that the US Fish and Wildlife Service deliberately delayed its final decision on the possible listing of the polar bear as an endangered species to ensure the sale was able to proceed have added further controversy.
Shell appeared to have won back exploration rights to territory in the Chukchi it explored in the late 1980s but abandoned, a company executive said.
"The time's right to return to Alaska," said Annell Bay, Shell's vice president for exploration in the Americas.
Bay said the company wanted to take back that territory, where oil and gas had been discovered decades ago, as well as other acreage in the Chukchi. Development there was dropped in favor of Gulf of Mexico deep-water opportunities, considered more promising to Shell at that time, Bay said.
Returning to the Chukchi has been a goal for Shell for several years, Bay said. The company has spent four years evaluating well data from its previous Chukchi exploration, as well as new seismic data and other information, she said.
"I see it as a proven, prolific and undeveloped hydrocarbon basin," she said. "This is an opportunity to develop a proven and prolific basin to supply energy security for North America."
Shell is undaunted by the hardships of working in the remote and costly Chukchi, in part because the company has experience working in other remote, far north offshore areas of the world, Bay said.
"I would say that future energy supplies are in challenging environments all over the world," she said.
Only five wells have been drilled in the past in the Chukchi, said John Goll, Alaska regional director for the MMS.