Feds to Shell: Drill, Baby, Drill in the Arctic

The Obama administration gave the oil giant a preliminary green light for controversial drilling off Alaska’s coast this summer.

National Journal
May 11, 2015, 10:23 a.m.

The Obama ad­min­is­tra­tion has ap­proved Roy­al Dutch Shell’s plan to drill off Alaska’s north­ern coast, es­cal­at­ing a col­li­sion with en­vir­on­ment­al­ists who say de­vel­op­ment in the re­mote Arc­tic wa­ters poses big risks to whales, po­lar bears, and oth­er spe­cies.

The In­teri­or De­part­ment’s off­shore-drilling branch on Monday offered a pre­lim­in­ary green light for Shell’s plans to drill ex­plor­a­tion wells this sum­mer in the Chuk­chi Sea, a re­gion that reg­u­lat­ors es­tim­ate could hold more than 15 bil­lion bar­rels of re­cov­er­able oil, and large nat­ur­al-gas re­sources too.

Shell is not in the clear yet. The com­pany would still have to ob­tain spe­cif­ic drilling per­mits, re­ceive au­thor­iz­a­tions un­der the Mar­ine Mam­mal Pro­tec­tion Act, and clear oth­er reg­u­lat­ory hurdles be­fore it could com­mence with mul­ti­year plans to even­tu­ally drill up to six wells in re­l­at­ively shal­low wa­ters about 70 miles off­shore.

But the ex­plor­a­tion plan‘s ap­prov­al lays bare the split between the White House and the green move­ment over Arc­tic drilling and pro­tec­tions.

En­vir­on­ment­al­ists, who fear oil spills in the eco­lo­gic­ally sens­it­ive re­gion, cri­ti­cized In­teri­or’s de­cision. “Shell has a his­tory of dan­ger­ous mal­func­tion­ing in the Arc­tic, while glob­al sci­ent­ists agree that Arc­tic oil must stay in the ground if we’re to avoid cata­stroph­ic cli­mate change,” said Tim Don­aghy of Green­peace.

It’s a ten­sion that Demo­crat­ic White House front-run­ner Hil­lary Clin­ton could face too. While Shell has been the most ag­gress­ive among en­ergy com­pan­ies in seek­ing to de­vel­op costly leases ob­tained dur­ing the George W. Bush ad­min­is­tra­tion, oth­er com­pan­ies hold leases there as well.

In ad­di­tion, more Arc­tic lease sales are tent­at­ively sched­uled in 2016 and 2017, and a re­cent Obama ad­min­is­tra­tion draft pro­pos­al en­vi­sions oth­er auc­tions of drilling rights in Arc­tic wa­ters in 2020 and 2022. Clin­ton has yet to un­veil her en­vir­on­ment­al and en­ergy plat­form, but her cam­paign chair­man, the in­flu­en­tial Demo­crat­ic strategist and act­iv­ist John Podesta, op­poses Arc­tic drilling.

The ex­plor­a­tion plan’s ap­prov­al Monday comes three years after Shell’s mis­hap-laden de­vel­op­ment ef­forts in the ad­join­ing Beaufort and Chuk­chi Seas. The com­pany suffered sev­er­al set­backs and nev­er won In­teri­or’s per­mis­sion to drill in­to oil-bear­ing sub­sea lay­ers.

Shell’s woes in­cluded dam­age to spill-con­tain­ment equip­ment dur­ing test­ing off Wash­ing­ton state’s coast, and a drilling rig that ran aground in Decem­ber 2012 on its way back from the Arc­tic re­gion.

But the spill-con­tain­ment sys­tem per­formed well in re­cent test­ing wit­nessed by fed­er­al of­fi­cials, the Hou­s­ton Chron­icle re­por­ted in April.

In­teri­or’s off­shore drilling reg­u­lat­ors are still craft­ing drilling-safety rules tailored spe­cific­ally for the Arc­tic, but say they will hold Shell to high stand­ards even though the rules are un­likely to be in place be­fore Shell re­starts de­vel­op­ment.

“We have taken a thought­ful ap­proach to care­fully con­sid­er­ing po­ten­tial ex­plor­a­tion in the Chuk­chi Sea, re­cog­niz­ing the sig­ni­fic­ant en­vir­on­ment­al, so­cial, and eco­lo­gic­al re­sources in the re­gion and es­tab­lish­ing high stand­ards for the pro­tec­tion of this crit­ic­al eco­sys­tem, our Arc­tic com­munit­ies, and the sub­sist­ence needs and cul­tur­al tra­di­tions of Alaska Nat­ives,” said Abi­gail Ross Hop­per, dir­ect­or of the Bur­eau of Ocean En­ergy Man­age­ment.

She said that “any off­shore ex­plor­at­ory activ­it­ies will con­tin­ue to be sub­ject to rig­or­ous safety stand­ards.”

Shell wel­comed the ap­prov­al but warned that reg­u­lat­ors should not drag their feet on the per­mits that are still needed.

“The ap­prov­al of our Re­vised Chuk­chi Sea Ex­plor­a­tion Plan is an im­port­ant mile­stone and sig­nals the con­fid­ence reg­u­lat­ors have in our plan. However, be­fore op­er­a­tions can be­gin this sum­mer, it’s im­per­at­ive that the re­mainder of our per­mits be prac­tic­al, and de­livered in a timely man­ner,” spokes­man Curtis Smith said.

While it’s seek­ing to drill in the com­ing months, Shell pre­dicts that ac­tu­al oil pro­duc­tion from its leases in U.S. wa­ters in the Arc­tic is a dec­ade away.

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