Shell VP makes case for Alaska drilling

Oil and gas drilling in federal waters near Alaska could create tens of thousands of jobs annually and send the government nearly $200 billion in revenue, a Shell Oil Co. executive is set to tell a Senate panel today.

Pete Slaiby, vice president of the company’s Alaska operations, is making his case for oil development near Alaska’s coasts before the Senate Oceans, Atmosphere, Fisheries and Coast Guard Subcommittee this morning. The panel is studying whether the U.S. should be doing more to take advantage of emerging economic opportunities in the Arctic region.

Shell is asking federal regulators for permission to drill up to five wells in both the Beaufort and Chukchi seas near Alaska during next year’s three-month drilling season. The Bureau of Ocean Energy Management, Regulation and Enforcement is currently vetting Shell’s proposed drilling blueprint for the Beaufort Sea, and the Environmental Protection Agency recently issued draft Clean Air Act permits that could cover the work.

But Shell has come this close before. The company has been aiming to drill in the Arctic waters near Alaska for nearly six years, since it bought offshore leases there in 2005.

Slaiby today is set to tell senators that planned drilling in the region — and the prospect of more to come — would be a big boon for the U.S. economy and national security. He argues:

  • Based on estimated oil and gas reserves and a $65-per-barrel oil price, energy production could generate $197 billion in government revenue from royalties and taxes.
  • It would help ensure the long-term viability of the Trans-Alaska Pipeline System, “an asset of national importance” that has linked Alaskan oil production with the lower 48 for the past three decades. Because of declining oil production, the pipeline is running at a third of its capacity and is at risk of being shut down.

Slaiby and other Shell executives have said they are optimistic their planned Alaskan drilling will go forward next summer. But Slaiby says the company’s five-and-a-half-year quest to drill shows that “the government’s permitting and regulatory process is not equipped to deliver.”

“To fully unlock the economic opportunities in Alaska, policy makers should support a regulatory process that is clear and efficient — one that ensures development is done in a responsible and sustainable way,” Slaiby will tell the Senate panel.

The House of Representatives passed legislation last month that would accelerate offshore drilling in the Arctic by curtailing environmental reviews of such coastal oil exploration projects.

Environmentalists who oppose Shell’s drilling plans have warned that it could be difficult to clean up any oil spilled in slushy Arctic waters. Cold, icy conditions also mean it could take far longer than in the much warmer Gulf for any spilled crude to naturally break up in the water. And they insist the risks are too great for seals, whales, walruses and polar bears that live in the region as well as the native communities that live off those resources.