Shell Alaska debates appeal to Beaufort Sea drilling delay
Originally published Friday, November 28, 2008 at 12:00 a.m.
Updated Friday, November 28, 2008 at 8:06 a.m.
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Stumble It!FAIRBANKS — The head of Shell Alaska said the oil giant might appeal a recent court ruling that has indefinitely delayed plans to drill exploratory wells in the Beaufort Sea during 2009.
The 9th Circuit Court of Appeals sided with environmental groups and others Nov. 20, agreeing that a federal review of the plan fell short of addressing the potential impact on marine mammals and the subsistence lifestyle of people living along the Beaufort shore. The court told the Minerals Management Service, which approves offshore drilling activities, to rework its assessment of Shell’s proposal.
Shell Alaska general manager Pete Slaiby said the decision was a disappointment in light of the $2.5 billion the company spent during the last three years on Outer Continental Shelf leases and operations in Alaska.
“The Ninth Court decision is really a tremendous disappointment,” Slaiby said. “This, in fact, becomes a de-facto moratorium the Ninth is imposing on us, against the will of the nation.”
He said the court decision may force some hard decisions on Shell.
“Any company is going to have to be careful about how they manage the capital of their shareholders,” Slaiby said. “We have a huge investment here. It is becoming a concern.”
The decision could set a precedent as to how exploration of Alaska’s offshore oil is, or is not, permitted.
Robin Cacy is a public affairs officer for Alaska’sOuter Continental Shelf region for MMS. She acknowledged the precedent-setting ruling likely will be affected by how MMS and Shell resolve the present issues.
“This is actually the first time, I believe, that we’ve lost a case on this point,” Cacy said. “I certainly don’t remember having an MMS action of this region overturned like this.”
She said the service will address issues raised in the court opinion and will have to see what happens with future exploration plans.
The decision came after Shell wrapped up what it calls the most successful seismic season ever in the Chukchi and Beaufort seas. Officials also touted progress in building on a slim body of knowledge about bowhead whales and other marine mammals through extensive scientific research, some of it in partnership with University of Alaska Fairbanks.
But the court ruled that MMS, responsible for approving Shell’s exploration plan, failed to take a hard look at the effects of development on bowhead whales and subsistence activities. Among the major gaps, according to the court, were how noise from drill ships and icebreakers might disturb the endangered whales, possibly prompting them to deviate from historic migration routes and feeding grounds, in turn forcing Native whalers farther from the coast in their search for the mammals.
Betsy Beardsley is environmental justice program director for Alaska Wilderness League, which led the case before the 9th Circuit.
“There is no proven science that shows that this kind of activity, exploratory drilling, wouldn’t have impacts on the bowhead whales and other species in the Arctic,” Beardsley said. “We believe this court decision is really sending a message that there needs to be a better understanding of what impacts would occur, should this kind of development happen in the Beaufort or Chukchi sea.”
The impact of development on the Inupiat people and their cultural lifestyle also was of concern to the court.
The North Slope Borough was among those petitioning the court. David Harding, spokesman for North Slope Borough Mayor Edward Itta, said the borough wants MMS to create a legitimate environmental study that includes analysis of potential impacts on people.
“The Arctic Ocean is the cultural heart of the North Slope,” Harding said. “It’s where the bowhead live and migrate, and the Inupiat depend on them for cultural survival as well as nutritional survival.”
Itta opposes offshore development on principle, Harding said, but realizes it may happen anyway and wants companies to be responsible.
“It’s really not anything more than anyone else would ask,” Harding said.
Slaiby, however, said Shell has a proven record as a responsible oil and gas developer, and that the company’s presence in the Beaufort and Chukchi seas is nothing new.
Shell and others drilled exploratory wells in the 1980s and 1990s, although economic conditions didn’t favor development at that time. No noticeable impact was recorded, and seismic and scientific research conducted this summer likewise didn’t appear to adversely affect whales, Slaiby said.
Now, Slaiby said Shell officials are considering their options, which include an appeal. In the meantime, dialogue with North Slope communities will continue in January and February.
The Minerals Management Service also is reviewing the ruling, Cacy said.
“We have a very robust environmental studies program,” she said. “We felt we had a good environmental analysis, that we’d done a very good job.”
The service’s environmental analysis of Shell’s proposal was supported by a 1,596-page Environmental Impact Statement covering the leases off Alaska’s coast and analyzing potential development impacts on wildlife and subsistence. According to an MMS statement, the service has funded almost $300 million in environmental studies of Alaska’s waters during the last 30 years. Since 2000, MMS has performed 30 to 40 environmental studies each year in offshore Alaska, spending more than $45 million.
Those are just not enough to offer basic protections for a sensitive, changing environment that’s home to the endangered bowhead whale, among others, Beardsley said.
“The Arctic is a special place in terms of having a number of keynote species — polar bears, the bowhead whales, ringed seals, walrus,” she said. “Any kind of industrial activity that takes place up there needs to ensure that those species are protected.”
She discounted Shell and MMS’s prompts that the U.S. needs to be more open to drilling to increase the nation’s energy security.
“It’s not like there is nowhere left to drill (onshore),” she said. “The Arctic is a changing environment, with impacts from global warming, increased shipping activity, the cumulative impacts of oil and gas development. Until that science is there, we need to take a time out on any offshore activity.”
Contact staff writer Rena Delbridge at 459-7518.
Community Discussion
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Because there is no known technology to clean up an oil spill in Arctic Ocean conditions and more than an oil spill a day at Prudhoe Bay, we will just have to live with Arctic Ocean oil spills. Polar bears are already on their way out and who needs bowhead whales ringed seals or walrus anyway. Just keep that oil money coming!
Does anyone know IF the oil and gas industry knows how to clean up an oil spill in ice conditions? I don't think the technology exists. This is an issue that Shell has with drilling in Bristol Bay waters as well as the Beaufort Sea. I have to be convinced that Shell knows how to clean up oil covered ice. Then my position on drilling off-shore Alaska may change.
Oh! poor shell!
"This, in fact, becomes a de-facto moratorium the ninth is imposing on us, against the WILL OF THE NATION".
Isn't this holier than thou attitude great?
Alaska and the lower 48 will be left out of off shore drilling, while the rest of the world is drilling off shore because that is where the large fields are being located. Check out Petrobras on the web and see what Brazil is up to off shore.
This constitutes a "takings". I believe that Shell should sue and prevail against the environmental groups that caused the moratorium. Shell acquired the leases in a perfectly lawful manner. It is the greenies that are trying to undermine the law and change the rules, after-the-fact.
Tundra-trekker --- polar bears are not "on their way out". This is cultural flapdoodle. If anything, the data shows that their populations (and caribou) have boomed during the oil development era. Polar bears are perfectly capable of hunting onshore and they can deal with a little warmth just fine.
There's very little need to drill offshore Arctic Ocean when there's plenty of oil onshore to fill TAPS and then some.
But unfortunately, environmental groups (by their uncanny ability to control Alaska through the courts and outside political forces) have made that impossible as well.
Shell's spokesperson told the Fairbanks Chamber of Commerce last February 08 that this region could rival the Gulf of Mexico in terms of oil and gas future potential. From this perspective it must be developed. Offshore development on the north slope could prove to be more important to the USA's national security and economy than any other energy resource. The USA needs cheap energy to continue to prosper and the past year has proven that as we face severe recession following $115 average oil prices the past 12 mos. Windwills, and solar might help incrementally, but they will not come close to solving our problem of reliance on foreign energy. New and increased domestic oil and gas production can however. The ninth circuit court rules against Alaskan resource development over and over again and Shell is right -- this time it is against the will of the people of the USA. The majority of people polled today want increased domestic oil and gas development.
I've heard Shell's pitch on cleaning oil in ice and in my view, it's pretty darn impressive. They do stress prevention and that makes sense considering the storm they would be in IF they did spill something. I'm interested to watch Shell in Alaska and I wonder if they will leave if the court keeps it up. Most people don't know it, but Shell has a great reputation in the Gulf of Mexico - a place where tons of offshore platforms exist pretty well. When we lived in Louisiana they were well respected. I can't recall for sure, but I think Shell built platforms off the coast of Kenai in the oil hay-days. Not a bad experience there.
I'll say it again.
Liberals want utopia so much that they're willing to ignor reallity and reason to the detriment of America.
Opponets say that oil exploration and or production in the Arctic would be damaging to the Inupiat culture. I think it would be most damaging to them if they could not afford to buy the oil they need to run their snowmobiles, outboards and marine engines they require to continue rendering the extinction of the very marine mammals their "friends" in the environmental groups claim to be so concerned about. Also none of them seem to be too worried about the effects on other even larger cultures if we don't drill in the Arctic. Harpoons kill far more whales than oil production will. I was in the Beaufort Sea this past summer, and witnessed the situation there first hand, it was sad to see, how much Inupiat culture was being destroyed, not by oil companies, but by media, hip-hop culture, and a generation of entitlement. I regret to say but, it is my opinion that such cultures will be lost no matter what we do, they are never going back to paddling out to the whales, or using spears instead of firearms and missile fired harpoons.-Unatailnuq
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