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Earlier this week Shell Oil announced that it was forced to put off completing wells in the Alaskan Arctic for another year after a spill containment dome was damaged during testing.
Shell says it will continue to perform preliminary work on wells in the region but it will not be able to drill for oil there until the summer of 2013.
Analysts say it's a significant setback for Shell's six-year, $4.5 billion effort to access Arctic oil. According to the New York Times, Shell's inability to control containment equipment in calm water under predictable test conditions suggest that the company may not be able to stop a sudden leak if less favorable conditions arose; i.e., powerful ice floes, gusty winds that complicate a spill response.
The Alaskan Arctic is one of the great untapped frontiers for offshore drilling in the U.S. Experts say that Arctic seas could produce up to 1 million barrels of oil per day, roughly equivalent to 10 percent of current domestic production.
Shell officials acknowledged that there are still glitches with the containment dome, which sits on top of a barge, and that those problems have not been resolved. "This particular system is not ready yet," said Marvin E. Odum, president of Shell Oil.
A mechanical device malfunctioned on the dome as it was being lowered into the water and Shell says it is investigating whether the problem involves the dome's design or was simply a testing error.
According to the Times, Shell has a flotilla of ships in Arctic waters. The company says it hopes to drill several pilot holes 1400 feet deep in the Beaufort Sea and Chukchi Sea and it will be the first drilling in the region in more than two decades.
The company has permission to drill the preliminary holes without the containment dome and barge at the site because the company will be operating thousands of feet above zones that contain oil and gas. The preliminary holes will eventually hold blowout preventers, the emergency equipment used to shut a well down when oil and gas surge out of control. After this year's drilling the holes will be capped to await further drilling next summer.
This appears to be a challenge that will ultimately yield great reward. Here's hoping that Shell's determination pays off and that American consumer interests will be well served with lower prices at the pump.