Interior approves drilling on 2 Beaufort Sea leases

The Interior Department today approved plans by Shell Offshore Inc. to drill on two leases in Alaska's Beaufort Sea.

The Minerals Management Service greenlighted the development with conditions, including a break from drilling during fall bowhead whaling by native tribes and compliance with air and water quality rules. The decision drew praise from Alaska lawmakers but condemnation from environmental groups.

Shell plans to drill two exploration wells during next year's July to October open water drilling season. The plan is limited to the far western area of Camden Bay, including the use of one drillship with one tending ice management vessel. The two leases are about 16 and 23 miles north of Point Thompson, Alaska.

"The Minerals Management Service is committed to responsibly developing offshore energy resources," MMS Director Liz Birnbaum said in a statement. "Now that we have approved Shell's plan and reached this important milestone, we will continue to work with Shell to ensure that all activities are conducted in a safe and environmentally responsible manner."

David Dickson, director of the Alaska Wilderness League's Western Arctic and Oceans Program, criticized the decision.


"We're very disappointed because MMS has approved this very substantial industrial activity in a very sensitive area without fully analyzing the potential impacts to marine wildlife and subsistence cultures that depend on that marine life," he said. "We had recommended that the MMS conduct a full environmental impact statement on this drilling activity prior to approving it and clearly they haven't done that."

Alaska Sens. Mark Begich (D) and Lisa Murkowski (R) welcomed the news.

"This decision shows Secretary Salazar and the Obama administration recognize the importance of Alaska's abundant offshore oil and gas resources, and it brings us one step closer to environmentally-responsible development offshore of Alaska," Begich said in a statement. "They are getting the balance right: including safeguards for important subsistence resources and allowing drilling to go forward."

Murkowski added, "This is good news as we advance increasingly serious discussions on energy legislation in the Senate. I will continue to work with the administration to ensure that environmentally responsible exploration is also allowed to move forward in the Chukchi Sea, and to secure revenue sharing for Alaska."

Shell obtained the two leases during oil and gas lease sales in 2005 and 2007. Because the sales were included in the 2002-2007 five-year offshore leasing program, they are not affected by a recent court decision that sent the 2007-2012 program back to MMS for additional analysis.

Prior to drilling, Shell must obtain an approved application for permit to drill from MMS, the agency said, and the plan must be consistent with the Alaska Coastal Zone Management Program. Shell must also meet the air and water quality rules of U.S. EPA and the Marine Mammal Protection Act requirements of the Fish and Wildlife Service and the National Marine Fisheries Service, MMS said.

The plans include a mid-drilling season break in activities and removal of the drillship from the area to accommodate fall subsistence bowhead whaling by the Native Villages of Kaktovik and Nuiqsut. All operations would be suspended beginning Aug. 25, 2010, and all vessels would proceed from the project area to the northwest during the whale hunts, or would leave the Beaufort Sea entirely. Activities may be resumed after completion of the subsistence hunts and extend through Oct. 31, 2010, depending on ice and weather.

The exploration wells will be drilled using the Frontier Discoverer, a modern drillship retrofitted and ice reinforced for operations in arctic OCS waters.

The Beaufort Sea is estimated to contain 8.22 billion barrels of oil and 27.64 trillion cubic feet of natural gas, MMS said.

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