Why Shell is betting billions to drill for oil in Alaska May 24, 2012: 9:19 AM ET This summer, the energy giant will begin exploring off the icy coast of Alaska -- after years of resistance by environmentalists. The payoff could be the largest U.S. offshore oil discovery in a generation. By Jon Birger, contributor FORTUNE -- Pete Slaiby is eating breakfast with an Eskimo businessman at a Mexican restaurant across the street from the Arctic Ocean when two Coast Guard admirals happen to walk in. It's 8 a.m. on a Tuesday in late March. Outside the temperature is an extremity-tingling, -35° F. Look 100 yards north, and it's not at all clear where the snow-covered land ends and the ice-covered ocean begins. Slaiby, Royal Dutch Shell's vice president for Alaska, rises to give the Coast Guard brass a warm welcome before they grab a nearby table. "Welcome to Barrow," he says wryly as he sits back down to his plate of huevos and reindeer sausage. Indeed, it's a typical morning at Pepe's, a hole-in-the-wall eatery in Barrow, Alaska, population 4,300, the northernmost municipality in the United States. Everyone is there for the same reason. And with apologies to Pepe's colorful longtime proprietor Fran Tate -- whose claim to fame is presenting Johnny Carson with an oosik, a walrus penis bone, during a 1984 appearance on The Tonight Show -- it's not the cuisine. They've all come to Barrow because some 100 miles offshore, in the Arctic Ocean's Chukchi and Beaufort seas, lies what U.S. government geologists believe is 27 billion barrels of recoverable oil. Slaiby wants Shell (RDSA) to be the first company to get that oil out of the seabed. The Eskimo is a subcontractor who wants a piece of Shell's business. And the admirals want to ensure that a drilling accident doesn't happen in an ocean ecosystem that environmentalists consider to be one of the most unspoiled on the planet. Alaska's outer-continental shelf has been off limits to oil companies -- despite the fact that Shell paid the U.S. government $2.2 billion for drilling rights back in 2005 and 2008. But that's about to change. After years of lawsuits, regulatory hitches, and other delays, Shell will finally sink its first exploratory wells in July, making this the first new offshore drilling project approved by the government since the 2010 BP (BP) disaster in the Gulf of Mexico. Come fall, the big news out of Barrow may well be America's largest offshore oil discovery in a generation. "We can't know," says Slaiby, "until we start drilling." The stakes are huge -- for Shell, for the environment, for the oil industry, and for the oil-addicted U.S. economy. The fact is, oil demand is soaring. Worldwide oil consumption is now running at 89 million barrels a day, according to the International Energy Agency. Not only is that up 6% from the lows of the recession -- a big increase given tight supplies -- but it's also above the pre-recession peak of 87 million barrels notched in 2008. Why Shell is betting billions to drill for oil in Alaska - Fortune Features Its known as "Realville" s0ns!!!!!