Feds give Shell green light to launch Arctic drilling

The Obama administration on Thursday agreed to immediately allow Shell to launch initial drilling in Arctic waters, even though a critical oil spill containment barge is still a two-week trek away.

Administration officials stressed that the company would only be allowed to begin initial site work and drill 1,400 feet below the surface of the Chukchi Sea without penetrating underground oil reservoirs until that emergency equipment has won Coast Guard certification and is on site.

Shell Alaska Vice President Pete Slaiby celebrated the development as a major milestone in the company’s six-year quest to begin a new era of oil drilling in remote Arctic waters that were last tapped in the early 1990s.

“Today’s announcement is extremely exciting,” he told reporters on a conference call. “And our goal of being able to drill in the Chukchi is about to take place.”

Administration officials rebuffed criticism from environmentalists who accused the White House of bending over backwards to satisfy Shell and oil drilling advocates in an election year.

“Shell will not be authorized to drill into areas that may contain oil unless and until the required spill containment system is fully certified, inspected and located in the Arctic,” said James Watson, director of the Interior Department’s Bureau of Safety and Environmental Enforcement. But the company will be able “to move forward with limited activities well short of oil-bearing zones that can be done safely now prior to the certification and arrival of the containment system.”

The move is aimed at allowing Shell Oil Co. to salvage what’s left of an already brief season for drilling in the remote Beaufort and Chukchi seas before ice encroaches this fall.

But it looks increasingly unlikely Shell will be able to complete a single Chukchi Sea well, unless regulators relax a Sept. 24 deadline for drilling in hydrocarbon zones in those waters.

Slaiby said it would be “very, very difficult” to finish a well in the Chukchi Sea unless the Interior Department granted them more drilling time.

The company has spent nearly $5 billion preparing to drill in the region but it has suffered a series of setbacks in recent weeks _ including long delays in the refurbishment of the 36-year-old Arctic Challenger spill containment barge. That ship is still docked in a Bellingham, Wash., shipyard, where it has been undergoing retrofits.

Under the safety bureau’s action, Shell is authorized to begin initial preparation work at its Chukchi Sea drilling site, including excavating a 20-foot by 40-foot mud line cellar, designed to hold a critical emergency device known as a blowout preventer just below the sea floor.

The company also will be allowed to begin so-called “top-hole drilling,” by setting the first two strings of casing into shallow non-oil bearing zones.

Thursday’s action does not affect Shell’s separate Beaufort drilling plans.

When the Interior Department approved Shell’s broad drilling blueprints for the Beaufort and Chukchi seas, it said permits for individual wells were contingent on the company satisfying the terms of its oil spill response plan, including staging a system for capping and containing a runaway underwater well in between the sites.

And in a conference call with reporters on Aug. 13, Interior Secretary Ken Salazar said he was committed to stiff oversight of Shell.

“I will hold their feet to the fire in terms of making sure we are doing everything we can to abide by the regulation we have set and to make sure that the environment and the Arctic seas are protected by their activities,” Salazar said at the time.

Salazar insisted Thursday that the administration is not backing down from that commitment.

“In terms of our approach, it has not changed at all,” Salazar told reporters on a conference call. “We are holding Shell’s’s feet to the fire. Unless the Arctic Challenger gets certified and has the containment capacity that is required, there will be no penetration in the oil-bearing zones in the Arctic, period, end of story.”

“The Challenger itself will have to be on site before they penetrate oil-bearing zones,” Salazar added.

Deputy Interior Secretary David Hayes noted that while the Challenger needs to be on the scene during drilling into areas that could hold oil, “it is equally clear that the preparatory work prior to going into an oil-bearing zone is in a different category.”

“The Challenger isn’t needed because there is not the opportunity for an oil spill,” Hayes said.

Before the Arctic Challenger could begin a two-week (or longer) journey to the Chukchi Sea, it has to be certified by the Coast Guard and successfully complete a drill for the safety bureau. Slaiby said sea drills for that Coast Guard certification could take place early next week.

Environmental activists who oppose Arctic drilling suggested that the government’s accommodation of Shell begs the question of who is in charge.

Mike LeVine, a senior counsel with the conservation group Oceana, accused the government of continuing “to bend over backward to accommodate a company that is still not ready to drill.”

“Companies like Shell must be held to the highest standards,” LeVine said. “Bending the rules because Shell is not ready is not consistent with that promise.”

Andrew Hartsig, the Arctic program director for the Ocean Conservancy, called the move “disappointing.”

“Shell will be authorized to drill approximately 1,400 feet down into the ocean floor even though its oil spill containment barge has not been certified and is still two weeks away from the drilling site,” Hartsig said. “Secretary Salazar claims he is holding Shell to the highest standards, but today’s decision tells a much different story.”

Shell still would need to get government-approved amendments to its permits to continue drilling its Arctic wells and go beyond the initial work at those sites.

Shell officials have said just two out of 10 planned wells have a chance of being completed this year. And Shell Alaska Vice President Pete Slaiby has conceded that even those two might be a challenge under the abbreviated schedule.