Unalaska, AK – Shell Oil has decided not to pursue an offshore drilling program in the Arctic this year, citing a lengthy permitting process as the rationale behind the move.

To drill an exploratory well in the Beaufort Sea, Shell must receive an air permit. The Environmental Protection Agency granted that air permit last year, but the agency was challenged by Alaska Native and environmental groups. An independent review board ultimately overturned the permit.

The Obama administration had told Shell that a decision regarding a new permit would be rendered in a timely fashion, but Shell did not believe they could wait any longer with the summer drilling season approaching.

Right now, it's unclear how this decision will affect Unalaska. At a distance of 1,300 miles, Dutch Harbor is the closest deepwater port to the proposed drill site in the Beaufort Sea, and a number of Shell oil spill response assets have been moored in Captains Bay since the summer. In December, Kulluk mobile drill rig - which would be used to drill a relief well in case of a spill - was brought to a specially fitted dock at Offshore Systems, Inc. The oil spill response vessel Nanuq is also moored at OSI.

Jeff Merrill is Shell's emergency response coordinator for the Alaska region. He says that Shell doesn't have any plans to remove these assets from Alaska at the moment, and that the Kulluk could potentially remain in Unalaska for another year.

"At this point, I'm not aware of any specific plan to do anything with either the Kulluk or the Nanuq in the interim," says Merrill. "But as those plans get developed, there could be a potential change in the future."

Merrill says that should Shell go ahead with drilling in the Beaufort Sea in 2012, Unalaska will continue to be a place of importance for the company.

"We continue to think of Dutch Harbor as our launching point and logistics hub, and I'm not aware of any plan different than that."

Jim Butler, who represents OSI, says that more details about the impact to OSI will be available next week.