Royal Dutch Shell Alaska Drilling Update

Royal Dutch Shell (“Shell”) is engaged in a multi-year drilling programme to explore for new oil & gas resources in high-potential blocks in offshore Alaska. Important progress has been made with this program, with two drill ships, more than twenty support vessels, an approved capping stack, and other redundant oil spill response equipment already in position. Shell continues to demonstrate the strength and extent of its Arctic preparations.

Over the last several days, Shell has successfully completed a series of tests of the first-ever Arctic Containment System. However, during a final test, the containment dome aboard the Arctic Challenger barge was damaged. It is clear that some days will be required to repair and fully assess dome readiness. We are disappointed that the dome has not yet met our stringent acceptance standards; but, as we have said all along, we will not conduct any operation until we are satisfied that we are fully prepared to do it safely.

The time required to repair the dome, along with steps we have taken to protect local whaling operations and to ensure the safety of operations from ice floe movement, have led us to revise our plans for the 2012-2013 exploration program. In order to lay a strong foundation for operations in 2013, we will forgo drilling into hydrocarbon zones this year. Instead, we will begin as many wells, known as ‘top holes,’ as time remaining in this season allows. The top portion of the wells drilled in the days and weeks ahead will be safely capped and temporarily abandoned this year, in accordance with regulatory requirements. We look forward to the final receipt of our drilling permits for the multi-year exploration program upon the successful testing and deployment of the Arctic Containment System.

These capabilities have, most recently, been evident in Shell’s ice management operations as it successfully moved one of its drill ships and support vessels safely out of the path of approaching sea ice. That drill ship, the Noble Discoverer, is expected to resume its position and drilling operations over the ‘Burger A’ prospect in the days ahead.

Also, in the coming days, Shell is expected to begin exploratory drilling in the Beaufort Sea. These operations will follow the conclusion of the fall whale hunt and the anticipated receipt of a top hole drilling permit.

We have tested and assembled drill ships and support vessels, trained personnel, and acquired numerous final approved plans and permits. This exploration program remains critically important to America’s energy needs, to the economy and jobs in Alaska, and to Shell.