Shell moves one step closer to drilling in the Chukchi Sea

The Interior Department said Friday it had approved Shell Oil Co.’s plan to respond to potential oil spills in the Chukchi Sea, bringing the company closer to drilling off the northern coast of Alaska.

Shell hasn’t yet received approval of its Beaufort Sea oil-spill response plan and must still get permits for each well it wants to drill. The Bureau of Safety and Environmental Enforcement said it also must inspect and approve various equipment Shell will use for the effort.

Royal Dutch Shell’s Houston-based arm, which also has received approval of its Beaufort and Chukchi exploration plans, hailed the spill-response plan’s approval as a major step toward starting to drill sometime in July. Shell wants to drill six exploratory wells over the next two summers in the Chukchi in shallow waters about 70 miles from the coast. It must stop drilling 38 days before when ice typically starts building up in the water around Nov. 1.

Shell has spent over $4 billion toward its ambitions to drill in the Beaufort and Chukchi seas since 2005, when it first started acquiring leases. But litigation and appeals of various stages of Shell’s application have delayed its plans.

“It’s been a long process, perhaps a torturous process, for Shell,” Sen. Lisa Murkowski, R-Alaska, said earlier this month. “I think it’s safe to say they are close to the end.”

Environmental and Alaskan native groups have opposed the drilling. They contend that no proven technology exists to clean crude from the icy waters or to contain a spill and that scientific gaps remain on how drilling would affect ecological, subsistence and cultural resources such as wildlife.

“The Deepwater Horizon oil disaster showed how difficult it is to respond to a major oil spill even in relatively benign conditions in an area with plenty of infrastructure,” Andrew Hartsig, the Ocean Conservancy’s Arctic program director, said in a statement.

Cindy Shogan, executive director with the Alaska Wilderness League, said the Obama administration can and should reject individual well permits to prevent drilling from starting or the president could “be left with the next major oil spill disaster on his hands – and the destruction of one of our planet’s most vital ecosystems.”

Pete Slaiby, Alaska exploration manager for Shell, said in an email his company’s drilling plans “will continually be guided by our extensive Arctic expertise, solid scientific understanding of the environment and world-class capabilities.”

The Interior Department said it worked with Shell and other agencies to revamp the company’s spill plan multiple times, bearing in mind the Arctic’s unique conditions, so it could handle a spill five times bigger than under a previous proposal.

Deputy Interior Secretary David Hayes said Shell probably wanted an answer on the Chukchi spill plan a few weeks ago but the regulators needed more time. He insisted the department would do due diligence on the rest of Shell’s application while giving the company a firm answer in time to meet its schedule.

Officials also said the spill plan incorporates lessons learned from the 2010 spill. It stipulates Shell would have systems — which will be tested — to cap and contain a blowout, and an extra rig that could drill a relief well. Additionally, they stressed that Shell would have tougher drilling safety equipment, including stronger blowout preventers.

James Watson, director of the safety agency, said if a spill occurred Shell would have six nearby vessels, including one with the containment system, that could respond right away and a BSEE inspector would be on board at all times. Officials said that the Coast Guard, with vessels nearby as well and a land presence, would oversee spill response and that safety exercises are underway.

“It’s truly a phenomenal collection of capability,” Hayes said.

Environmentalists nonetheless weren’t convinced.

Hartsig pointed to a recent blowout of Spanish company Repsol’s onshore exploratory well on Alaska’s North Slope in saying Interior’s optimism about Shell’s plan is misplaced.

“While it is an onshore gas well, it illustrates an important point that even major companies experience accidents,” Hartsig said.

Hayes told reporters that the Environmental Protection Agency and Interior Department were still assessing the ongoing blowout and would continue to monitor it.

The Interior Department also defended “the extensive information that already exists on the Arctic” and said it was launching a program where companies that explore and drill there gather more data to inform future policy decisions. Hartsig said he’d still like to see a more comprehensive science plan.

But he offered cautious praise for another new plan announced by Interior for assessing and managing areas that “support special wildlife, land or water resources, as well as areas important for the subsistence and culture of local communities.”

Shell noted that additional drilling up in the Arctic could supply more oil to the Trans-Alaska Pipeline, which running just one-third of its capacity. The U.S. government believes the Arctic outer continental shelf areas have 26.6 billion barrels of recoverable oil and 130 trillion cubic feet of natural gas.

Hayes has defended what he called the “conservative decision” to require Shell to stop Chukchi drilling 38 days before Nov. 1, roughly when ice starts building up in the water. He said the Beaufort Sea plan lacks that restriction because ice poses less concern there.

“We had a lot of questions about that,” Murkowski said. “But that’s something Shell will have to live with.”