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Shell embarks on controversial Arctic exploration programme as part of £4.5bn quest for oil

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Shell has kicked off its controversial Arctic exploration programme as part of a £4.5billion search for oil under the region’s freezing, pristine seas.

After being forced to embarrassingly abandon its plans in 2012 and pulling out after finding gas in the 1990s, Shell’s convoy of 30 boats and associated craft set sail from Alaska’s Dutch Harbor. The plan is to drill two wells this summer – as soon as the ice clears.

But if its initial wells do not strike oil, Shell could pull out of the programme and walk away. By the end of the summer it will have spent £4.5billion on the programme and will have to spend another £700million in next year’s search.

‘We’ve learned valuable lessons, listened to recommendations and have adapted our approach accordingly,’ she added.

Shell, which is also in the process of buying BG Group for £47billion, should know whether the wells have enough oil to explore further by the end of next year. Pickard and her team have meticulously planned this year’s attempt.

This time it has more people and more equipment – Shell has trained more than 2,000 people.

The relationship with Shell’s contractors has also been overhauled, and details such as ensuring fresh food is supplied to the people on the rigs has been improved.

At 130 feet deep, the Arctic’s waters are not as deep as the North Sea but its distance from ports and the threat of ice flows is what makes the project risky. The distance between wells and port is comparable to setting off to drill in the North Sea from New York and the extent of the ice flows can cover the size of Manhattan. The convoy has set off from Dutch Harbor without all the necessary permits in place from the US government. The Department of the Interior gave the initial go ahead in May and Shell is confident it will get the remaining permits signed off this month.

Shell plans to drill two wells initially – if it gets approval – which could take two years as the drilling can only take place during the summer months when the ice has cleared. The company (down 4.5p at 1812p) will be able to drill the wells until the end of September for this ‘seasons’ drilling and will then have to return next summer. Pickard expects to drill between four and six wells over the period.

It has faced a series of protests from the likes of Greenpeace to stop the drilling programme amid fears of the impact on wildlife, including bowhead whales and polar bears. But Pickard said: ‘Shell has been researching and exploring at various times in the Arctic for almost 100 years.’ She believes its research will ensure its impact on wildlife is limited.

Shell abandoned its programme in the 1990s as it decided exploration in the Gulf of Mexico was more cost effective.

However, it now believes the global demand for oil now justifies its decision to go back.

Pickard was drafted in to Shell’s Arctic project after a 15-year career at the company where she most recently oversaw the creation of its floating Liquefied Natural Gas (LNG) development from the Prelude and Concerto gas fields off the coast Western Australia. Prior to that she has run Nigeria for Shell and previously worked at Mobil.

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