Shell looks to ‘next chapter’ as Interior clears way for next steps in summer drilling

By Margaret Kriz Hobson | 04/01/2015 08:00 AM EDT

The Interior Department yesterday ended a legal battle that blocked oil drilling in the American Arctic, clearing the decks for the Bureau of Ocean Energy Management to begin formally reviewing Royal Dutch Shell PLC’s application to explore this summer in the Chukchi Sea.

In a move that was immediately attacked by national environmental groups, Interior Secretary Sally Jewell issued a record of decision reaffirming the government’s 2008 decision to sell oil and gas leases in Alaska’s Chukchi Sea (E&ENews PM, March 31).

The lease sale was suspended last year after the 9th U.S. Circuit Court of Appeals ruled that the government’s 2007 environmental review vastly underestimated how much oil could be developed as a result of auctioning the offshore region.


Since then, BOEM has followed a breakneck schedule to revise its flawed supplemental environmental impact statement in time for Shell to drill during this summer’s open water season (EnergyWire, March 23).

Interior’s record of decision acknowledged that "environmental resources could be adversely impacted to varying degrees by routine activities resulting from [leasing] and by potential accidental events, such as oil spills."

But the final report concluded that the leasing plan includes "adequate environmental safeguards and is consistent with the maintenance of competition and national energy needs."

With the lawsuit behind them, federal regulators are now free to formally accept Shell’s application to explore on the company’s Chukchi leases. The oil giant submitted the drill proposal in August and was allowed by the court to hold informal talks with federal regulators while the lawsuit was pending.

An Interior Department spokeswoman said that Shell’s exploration plan could be "deemed submitted" in the near future, a step that would give BOEM 30 days to review the proposal.

Shell officials were heartened by Interior’s decision. Company spokesman Curtis Smith said the step "means we can continue making plans to drill this summer."

The company’s final decision on moving forward in the Arctic, he said, will be "contingent on achieving the necessary permits, legal certainty and our own determination that we are prepared to explore safely and responsibly."

Kara Moriarty, president of the Alaska Oil and Gas Association, applauded Jewell’s action, calling it "a step in the right direction."

"The Arctic offshore is the next chapter of Alaska’s oil and gas success story, and today’s decision clears another significant hurdle," she said.

The industry-backed Consumer Energy Alliance praised the Obama administration’s decision as "an important milestone for consumers across Alaska and the nation at large."

"The federal government must move forward in a timely manner to grant the remaining approvals and permits necessary to access these resources," alliance President David Holt said in a statement.

Activists cite climate, Arctic ambitions

However, environmental activists charge that the action undermines President Obama’s promise to address climate change and to transition to clean sources of energy.

They noted that Jewell signed off on the Arctic leasing environmental report on the same day that the White House promised to cut U.S. greenhouse gas emissions by at least 26 percent by 2025, and "to make best efforts to reduce its emissions by 28 percent" (Greenwire, March 31).

"As the U.S. prepares to take over the Arctic Council, it’s more important than ever to show leadership in keeping dirty fuels in the ground, especially in the Arctic," argued Dan Ritzman, Alaska program director for the Sierra Club.

Rebecca Noblin, Alaska director for the Center for Biological Diversity, noted that "the industrial oil development that Interior hopes will flow from its decision to approve the Chukchi lease sale gives us a 75 percent chance of a large oil spill and a 100 percent chance of worsening the climate crisis. I don’t like those odds."

Margaret Williams, managing director of U.S. Arctic programs for the World Wildlife Fund, expressed disappointment that leasing will continue "at a time when there are no proven ways to safely drill in this remote region and no viable means for cleaning up potential spills."

Meanwhile, Greenpeace officials predicted that Shell’s plan to drill in the American Arctic will attract international resistance.

"While this decision is deeply disappointing, it will also energize people around the world to oppose Shell at every turn," argued Greenpeace USA Executive Director Annie Leonard. "Shell’s Arctic oil rigs are now infamous, and all eyes will be looking north this summer."