Shell’s Arctic Drilling Plans Suffer Another Blow

Shell faces another setback in its plans to drill for offshore oil in the Arctic, this time from a federal board that sided with Alaska Native and environmental groups and kicked air quality permits back to the Environmental Protection Agency for further review.

The order by the Environmental Appeals Board invalidates Shell Offshore Inc.’s permits for both the Chukchi and Beaufort seas. It said the EPA had failed to adequately consider the impact of nitrogen dioxide emissions during drilling operations on nearby communities and that the agency erroneously determined when a drillship, the Frontier Discoverer, would be subject to air quality issues.

The appeal was filed by the Arctic Eskimo Whaling Commission, the Inupiat Community of the Arctic Slope, the Center for Biological Diversity and Earthjustice on behalf of other groups.

Rebecca Noblin, an attorney with the Center for Biological Diversity in Anchorage, said the ruling supports the groups’ contention that the administration “rushed” Shell’s permits through the process. “It’s time for the administration to take a step back and rethink the foolhardy rush to drill in the fragile Arctic Ocean,” she said in an e-mail.

Curtis Smith, a spokesman for Shell in Alaska, called the decision “disappointing given the time and resources we’ve committed to having minimal impact on the Arctic air shed.”

He noted that the operations would have “no practical impact” on residents from air emissions.

Smith said its cost Shell more than $45 million and taken four years to get to this point with the air quality permits. Company officials will be meeting with EPA staffers to see what needs to be done to fix the concerns and get the air permits back.

“We’re exploring a path forward that might still allow for a drilling season in 2011,” he said.

Work in the Chukchi Sea has been put on hold by a federal court based on successful challenges by conservation groups that environmental concerns weren’t adequately addressed when leases were sold a few years ago. But the company has been hoping to sink a single exploratory well on leases it holds in Camden Bay in the Beaufort Sea near Kaktovik. Shell has applied for a permit to drill the well and is awaiting a decision by the federal Bureau of Ocean Energy Management, Regulation and Enforcement.

But circumstances and legal hurdles are making chances the drilling program will get going a bit dicey. The Obama administration has slowed the process by more carefully examining offshore oil operations in light of the Deepwater Horizon blowout in April. The government also recently designated more than 187,000 square miles of Arctic coast as critical polar bear habitat which requires more scrutiny and broader approval of requests to work in the area.

Now, the remand of the air quality permit adds to the uncertainty over whether Shell will be able to put a drilling program together in time to catch the short work season in the Arctic. Shell’s Alaska president Pete Slaiby told reporters in October that the company would need approval by December in order to be ready to drill this summer.

Smith said Monday the company eased up on that self-imposed deadline after Interior Secretary Ken Salazar announced on Dec. 1 that he intended to process the application for a permit to drill and allow Shell to move through the regulatory system.

“That moved our go, no-go timeline by 30 days,” Smith said. “What we’d wanted was an indication to work with us and what he did was lift the somewhat ambiguous suspension.”

Smith said Shell still needs approval for the drilling permit itself as well as other authorizations relating to disturbing wildlife. Now the air quality issue needs to be resolved, too.

Still, Smith said the company is not giving up on drilling this summer and has been encouraged by the federal government’s willingness to move ahead. “We’ll be looking to see if we can continue the momentum into this new year,” he said.


Source:Kosmos, January 5, 2011