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Shell refurbishing rig for drilling in oil fields off the Alaskan coast

During the last year, some 400 workers at a shipyard on Seattle's Harbor Island have been installing diesel engines, welding bulkheads, painting and tackling other tasks to prepare the Kulluk, a Shell Oil rig, for drilling holes this summer in the sea bottom off Alaska's North Slope.

The refurbishing of Kulluk and other Shell work done in the Pacific Northwest have pumped some $200 million into the local economy, according to company officials. This could be the launch to what may be a decade of exploration and development of offshore oil fields in Arctic waters.

"It's the first new maritime-associated industry to start to emerge in Puget Sound in decades, and we're just thrilled about it," said John Lockwood, a senior adviser at Vigor Shipyards, which landed the oil-rig work at Harbor Island.

The push into the Arctic comes amid a major resurgence of a U.S. oil industry that once appeared stuck in long-term decline. Within the past five years, new technologies exploiting oil fields in North Dakota, Texas and other states have contributed to a 15 percent rise in U.S. production since 2008.

Federal estimates of the potential oil reserves in the Beaufort and Chukchi seas off Alaska's North Slope indicate there could be 25 billion barrels, an amount greater than the crude produced at the giant Prudhoe Bay onshore field during the past 30 years.

But Shell's initiative is stirring up an old fight over oil drilling in the Arctic.

Environmental organizations have repeatedly opposed Shell in court. Greenpeace has conducted a series of protests, and this summer the group is sending one of its protest ships, Esperanza, to monitor drilling.

Shell's plans also have raised concern among the Inupiat Eskimos of Alaska's North Slope, who have benefited enormously from onshore oil development yet turn to the sea to hunt bowhead whales and other marine mammals.

Some residents have backed offshore exploration as a way to create jobs and a tax base to sustain the North Slope economy. Others have opposed Shell.

"We are opposed to offshore development because the ocean is like our garden up here in the Arctic for our subsistence way of life," said Tommy Olemaun, executive director of the Native village of Barrow, Alaska, a tribal organization that is separate from the Barrow municipal government.

"The bowhead whale is the major food that we live off, and then there is the walrus, bearded seal and beluga."

Shell first drilled in Arctic waters back in the 1980s, before abandoning the test holes during a period of low oil prices.

If the company embarks on a new round of development, Shell officials say, production from the fields wouldn't begin until 2023 at the earliest.

Shell's preparations could include a 400-mile pipeline that would be needed to carry Chukchi Sea oil across the North Slope to the trans-Alaska pipeline.

"We are not touting any kind of grand energy independence. This is all about energy choice," said Pete Slaiby, a Shell Alaska vice president. He said offshore Arctic oil could help replace crude from regimes that the United States does not want to support.

The Kulluk and a second rig, the Noble Discoverer, are scheduled to depart Seattle later this month for the slow journey north. The rigs would begin drilling sometime in July, when unusually heavy pack ice recedes enough to allow for summer work to begin.

The circular Kulluk, with a derrick that towers some 230 feet above the ocean's surface, was built in the early 1980s. It drilled wells in the Canadian Beaufort Sea before being stored for years in shoreside ice. The refurbished Kulluk has new diesel engines and will house 108 crew members. The crew will work 12-hour shifts through the drilling season.