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Energy / ENERGY

Interior Removes Hurdle to Arctic Drilling

Alaska's Arctic National Wildlife Refuge(U.S. Fish and Wildlife Service/Getty Images)

photo of Coral Davenport
August 4, 2011

The Interior Department today removed the last major regulatory hurdle for Shell Oil in its quest to drill in Arctic waters off the coast of Alaska -- a move that Big Oil’s friends are celebrating and environmentalists are bemoaning.

The move comes as President Obama has been under attack by the oil industry’s Republican allies in Congress, who have slammed the administration for slowing the pace of offshore drilling. People familiar with the decision say they expect the White House to highlight the move as part of Obama’s shift toward a business-friendly center ahead of the 2012 elections.

Shell has hoped for years to be the first company to strike oil in the federal waters of the Arctic’s Beaufort Sea, but environmental groups have pressured the Obama administration not to allow drilling in sites as close as 16 miles to Alaska’s pristine shores.


Shell had hoped to begin drilling exploratory wells last summer, but the Interior Department delayed permitting the Arctic wells after the Deepwater Horizon disaster sent millions of gallons of oil spewing through the Gulf of Mexic.

Environmental groups launched an aggressive campaign against the Arctic drilling, warning that a similar spill in the icy, treacherous waters so far from major infrastructure and so close to pristine wildlife could have far more devastating impacts than the Gulf disaster.

But the Interior Department announced that it will approve Shell’s exploratory plan, including its contingency plans for dealing with spills. Although the company will still have to apply for some additional drilling permits in the coming months, people familiar with the decision said it effectively paves the way for the company to start offshore Arctic drilling next summer.

Among the conditions for approval is the requirement that Shell obtain all necessary permits from other agencies, including the Environmental Protection Agency, the U.S. Fish & Wildlife Service, and the National Marine Fisheries Service.

“We base our decisions regarding energy exploration and development in the Arctic on the best scientific information available,” said Michael R. Bromwich, director of the Interior Department's Bureau of Ocean Energy Management, Regulation, and Enforcement. “We will closely review and monitor Shell’s proposed activities to ensure that any activities that take place under this plan will be conducted in a safe and environmentally responsible manner.”

In a statement, BOEMRE said that in its environmental review of Shell’s plan, the agency “found no evidence that the proposed action would significantly affect the quality of the human environment.”

Sounding deeply dejected, Emilie Surrosco, a spokeswoman from the environmental group Alaska Wilderness League, said, “After the Deepwater Horizon, we see so many problems with this -- with the conditions, the remoteness and the ice – you just don’t know what would happen in the case of a spill. It’s extremely frustrating.” Surrosco said that based on her group’s review of Shell’s safety plan, it seems possible that the drilling could result in a spill that would be much more difficult to contain than the BP spill.

Robert Dillon, a spokesman for Alaska Sen. Lisa Murkowski, the top Republican on the Senate Energy and Natural Resources Committee, said he was delighted with the decision.

“This has been a long time coming and good news for Shell’s exploration in Alaska and the nation,” he said.

Dillon added that the move could also resonate in the broader debate about cutting the nation’s staggering deficit, noting that the royalties oil companies pay to drill in federal waters are a major source of federal revenue.

“We need revenue, and we need energy. This is major new federal revenue from taxes and royalties,” Dillon said.



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