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Anchorage Daily News: Shell plans Beaufort Sea drilling

NEW ACQUISITION: Oil giant buys mothballed drilling rig to prepare for 2007 exploration.

Dutch oil giant Shell, which stormed back to Alaska last year by spending more than $44 million on Beaufort Sea exploratory leases, has purchased a mammoth drilling rig to probe the Arctic waters for crude.

The rig, called the Kulluk, has been mothballed since 1993 and now sits in a remote bay along Canada's Northwest Territories, said Cam Toohey, a Shell spokesman in Anchorage. Shell bought the rig late last year from Seatankers Management Co., based in Cyprus.
Shell plans to refurbish the rig where it sits and then move into the Beaufort Sea off the Alaska coast to drill on the company's leases, he said.
The soonest drilling could begin would be summer of 2007, Toohey said.
Kulluk is an Eskimo word for thunder.
The rig was built in Japan in 1983 and has a history of drilling in Alaska's Arctic waters.
It's specially designed to deal with ice that can shift around the Beaufort with crushing force against anything in its path.
The Kulluk is a barge with a conical hull and a drilling derrick on top, making it look something like an upside down mushroom. When ice up to four feet thick pushes up against the rig, the hull acts to force the ice downward and break it up, preventing a floe from pushing the rig off its position.
The rig's main deck is 133 feet across and can drill in water from 60 to 600 feet deep. It has berths for up to 108 crewmen.
Shell once was a major explorer in the Beaufort and Chukchi seas, as well as in Cook Inlet.
But the company never was able to find the giant discoveries it wanted and by the late 1990s it had pulled out of Alaska.
A year ago, Shell leased nearly a half million Beaufort Sea acres, spending more than $12 million on a single block off Point Thomson, some 60 miles east of Prudhoe Bay. A drilling partnership including Shell struck oil there in 1985, but the find known as Hammerhead never was developed even though it was estimated to hold up to 200 million barrels of oil.
Another undeveloped oil discovery known as Kuvlum is nearby.
Shell, based in The Hague, Netherlands, is one of the world's largest oil companies, with operations in more than 140 countries and territories.
Petroleum News, an Anchorage oil industry trade journal, recently reported that Shell also bought a drill ship that's being refurbished in Singapore. The newspaper said that under government rules, Shell would need two drilling platforms so one could lend support to the other in case of an oil spill.
Toohey, however, declined to confirm the report of Shell acquiring the drill ship.
Shell is building an Alaska staff, and representatives recently traveled to the North Slope villages of Barrow, Nuiqsut and Kaktovik to tell residents there about the company's exploration plans.
Offshore drilling is a concern of many villagers because of potential for industry operations to disrupt the endangered bowhead whale, which villagers harpoon for food.
Daily News reporter Wesley Loy can be reached at [email protected] or 257-4590.

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