Business Day|Shell Is High Bidder to Drill for Oil and Gas Off Alaska
Shell Is High Bidder to Drill for Oil and Gas Off Alaska
By THE ASSOCIATED PRESS FEB. 7, 2008
ANCHORAGE, Alaska (AP) — Royal Dutch Shell led a handful of petroleum companies in bidding Wednesday for leases in the Chukchi Sea off Alaska's northwest shore.
The sale went forward over the protest of conservation and Native Alaska groups, plus objections by Congressional members outside the state, who said the federal agency, the Minerals Management Service, should have delayed the sale until a decision was made on protections for polar bears.
Shell's vice president for exploration for the Americas, Annell Bay, said the lease sale was an opportunity to move into an undeveloped region that could help meet an increasing demand for energy. "There's not many areas like this in the United States," Ms. Bay said.
Seven companies offered bids totaling nearly $3.4 billion. High bids added up to nearly $2.7 billion on 2.76 million acres. The federal agency estimates the area contains 15 billion barrels of conventionally recoverable oil and 77 trillion cubic feet of conventionally recoverable natural gas.
Shell, bidding as Shelf Gulf of Mexico, submitted 275 high bids, adding up to $2.1 billion. Shell bid $105 million for one tract, which worked out to be $18,497 a acre.
A second company, ConocoPhillips, submitted 98 high bids adding up to $506 million and competed with Shell for dozens of others. ConocoPhillips was unsuccessful on 47 tracts for which it bid $593.6 million. Shell was unsuccessful on 27 tracts for which it had bid another $82 million.
Other bidders included Repsol E&P USA, with 93 high bids that added up to $14.4 million; Eni Petroleum US, with 17 bids for $8.9 million; and Statoil Hydro USA E&P, with 16 for $14.4 million.
The federal agency will take about 90 days to review bids. It can reject bids that do not meet fair market value.
The sale, covering an area slightly smaller than Pennsylvania, was in marine habitat used by one of two of Alaska's polar bear populations.
Protesters braved temperatures of 13 degrees below zero, holding signs that read, "Chill the Drills," "Don't spoil my dinner" and "I prefer whale oil."
Under the sale, the agency envisioned moving the oil by a pipeline built from Northwest Alaska to the trans-Alaska pipeline, which moves North Slope oil to tankers in Valdez.
"My worst fear is that they have an oil spill," said George Kingik, the former mayor of Point Hope, an Inupiat Eskimo community southwest of Barrow.
Conservation groups say development of offshore oil fields will add stress to a rapidly changing environment hammered by global warming and record summer ice loss.
"It's irresponsible to move ahead with the lease sale in light of global warming and its immediate effect on the Arctic," said Trish Rolfe, Alaska region representative of the Sierra Club.
The director of the Minerals Management Service, Randall Luthi, said he was confident development could occur without harm to the environment.
A version of this article appears in print on , on Page C2 of the New York edition with the headline: Shell Is High Bidder to Drill For Oil and Gas Off Alaska. Order Reprints| Today's Paper|Subscribe