Shell in US talks to extend Arctic leases Shell's Arctic programme has already cost $4.5bn Royal Dutch Shell, the European oil company, has been in talks with the US government over extending its leases for oil development in the Arctic seas north of Alaska, after its drilling programme was held up by legal actions and objections from regulators. The first of Shell's Arctic leases to expire will run out in 2015 and the company has begun talking to the US interior department in the hopes of agreeing early extensions to its drilling rights. Pete Slaiby, Shell's vice-president for Alaska, said: "I strongly suggest that the department of the interior needs to be more sensitive to the fact that we have struggled with a number of legal and regulatory challenges." Shell has two rigs working in the Arctic, one in the Chukchi and one in the Beaufort Sea, drilling "top holes" - the upper portions of oil wells that descend about 1,500 feet, stopping thousands of feet short of oil-bearing rocks. It is fitting the steel casing to a well in the Chukchi Sea and making good progress on another in the Beaufort Sea. It has invested heavily in the Arctic, spending more than $4.5bn in preparations for drilling, including about $2.2bn on leases, and is spending hundreds of millions more each year. Yet it will not be able to complete any wells this year after running out of time to secure the necessary regulatory approvals. The US has set October 31 as the date for Shell to stop drilling to avoid the encroaching sea ice. The department of the interior usually leaves extensions of drilling rights until closer to their expiration, but Shell is seeking to clarify as early as possible the position of the 275 leases it acquired in 2005-08. US offshore leases expire after 10 years, at which point the rights revert to the government unless the leaseholder can secure an extension, which typically depends on it being able to demonstrate that it is drilling on the lease or can bring it into production. Shell had first intended to drill in the summer of 2007, but was delayed by lawsuits from environmental campaigners and Inuit communities, the US government's moratorium imposed after BP's Deepwater Horizon disaster in 2010 and other regulatory obstacles. President Barack Obama's administration has repeatedly attacked oil companies for holding leases that they were not working on, but Mr Slaiby said Shell's Arctic holdings "in no way" fit that pattern. "We are the poster child for a company that is trying to drill fully all the plays that we have bought," he said. We are extremely good custodians of those leases. He also rejected the warning from Christophe de Margerie, chief executive of Total, the French oil group, that damage that could be done by a spill in the Arctic meant that companies should not drill for oil there. "We've put together systems that we believe are second to none," Mr Slaiby said. We believe we can do it in a way that serves the interests of our shareholders as well as those of the community.