With Royal Dutch Shell (NYSE: RDS-A) (NYSE: RDS-B) signaling intentions to return to Alaska fields, it's clear that oil companies are warming up to Arctic drilling.

The president of Shell's U.S. unit, Marvin Odum, is hopeful that the company will resume drilling in Arctic waters off the coast of Alaska by the summer of 2012. Given the current macroeconomic situation of the oil markets, this was an obvious play. With oil prices pushing up along with the global demand, it makes little sense for a $220 billion oil giant not to start operations in 275 lease blocks off the Alaskan coast.

The potential
Alaska is estimated to hold more than 3.5 billion barrels of oil -- or about 17.2% of total reserves in the U.S. -- second only to Texas, which is estimated to have 5 billion barrels in reserves. However, at this point, Alaska accounts for only 11% of the country's crude oil production. Thus, upside potential in the region is understandably huge.

The challenges
Of course, things aren't easy when it comes to drilling offshore in Arctic waters. BP (NYSE: BP), which operates the largest oilfield in North America -- the Prudhoe Bay oilfield -- along with ExxonMobil (NYSE: XOM) and ConocoPhillips (NYSE: COP), clearly knows the difficulties of oil spills and corrosive pipelines -- and that was in the temperate, bathtub-like waters of the Gulf of Mexico. Oil recovery in the waters of the Bering Sea is anything but bathtub-like. Exxon knows a thing or two about that.

Shell has yet to obtain permits from the government to go ahead with the $3.5 billion investment. However, the company seems to have various proactive measures in place with a three-tier oil spill response system. This is the kind of preparation that will likely win the hearts and minds of politicians currently dealing with high energy prices.

The future
In the long term, assuming that appropriate safety measures are built, this investment will likely augur well for this Anglo-Dutch company and for its investors. The potential is huge, and a company like Shell is capable of exploiting this opportunity to the fullest. From a larger standpoint, I think it's likely we're going to see oilfields in the Arctic opening up more and more. When energy markets become as volatile as they have been (in the upward direction that is), the protests of those against expanded drilling in the U.S. can't be heard quite as loudly.

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