Feds consider whether to allow Shell to resume Arctic oil exploration

The Obama administration is weighing whether to allow Shell to resume drilling in Arctic waters off Alaska after a series of mishaps halted its controversial oil exploration effort last year.

The decision is among the toughest issues faced by new Interior Secretary Sally Jewell, who portrays herself as both an advocate for the environment and a supporter of drilling.

Jewell’s predecessor, Ken Salazar, allowed Shell to drill in the Arctic waters north of Alaska last year, only to later say the company “screwed up.” Interior Department spokeswoman Kate Kelly said Wednesday that drilling won’t resume until the agency has confidence that the effort addresses lessons learned.

A dozen environmental groups wrote the Interior Department this week, complaining that Shell’s new exploration plan fails to show how the company would avoid problems it had during last year’s drilling season.

“Nowhere does Shell describe how it intends to address the many problems exposed by its 2012 drilling season,” wrote the environmental groups, including Oceana, the Sierra Club and the Natural Resources Defense Council. “Instead, the company seems simply to pretend the problems never happened.”

Shell put forth the new exploration plan earlier this month. The document says, “Shell’s 2012 exploration drilling operations in the Arctic were conducted safely, and with no serious injuries or environmental impact.”

The company hopes to resume drilling, possibly as soon as the coming year. Shell filed the exploration plan to keep open the chance of 2014 drilling but said the issue of safety will determine when it returns to the Arctic.

“We will continue to take a methodical approach to this exploration phase and will only proceed if the program meets the conditions necessary to proceed safely and responsibly,” Shell said in a written statement.

Shell experienced a series of problems and accidents last year, among them the grounding of a drilling rig, the Kulluk, which was stuck for several days off Kodiak Island. The Coast Guard said it found 16 safety and environmental violations on the other drilling rig used by Shell, the Noble Discoverer, which the company hopes to use again if allowed to resume drilling in Arctic waters.

Regulators also charged that both drilling rigs violated air pollution permit limits. The Environmental Protection Agency imposed more than $1 million in fines in a settlement agreement.

Shell suspended its offshore Arctic efforts this year and said it was taking the time to review lessons learned.

Shell’s new exploration plan is only for the Chukchi Sea off northwest Alaska, while previously the company also targeted the neighboring Beaufort Sea.

The Chukchi Sea contains by far the biggest prize, the Burger Prospect, which the oil company says could turn into a world-class, multibillion-barrel discovery. Shell has spent more than $5 billion so far on its Arctic offshore effort and has yet to extract oil.

Shell’s Alaskan efforts are part of a global race to harvest energy from the world’s Arctic waters. It is a frontier region with potentially large oilfields but also high costs and substantial environmental risks, said a recent report from the International Energy Agency.

The IEA projects that, given the availability of other sources of oil, less than 200,000 barrels a day are going to be produced globally from Arctic waters by 2035.

“Some developments could go faster, in particular those spearheaded by Russia, in partnership with international companies, in the Kara Sea and the Barents Sea, or by Norway in the Norwegian part of the Barents Sea,” the IEA concluded in its energy report.

Environmental groups are opposing Arctic offshore oil drilling across the globe. The dozen groups that signed the letter to the Interior Department this week said Shell’s exploration plans for the Chukchi Sea include more pollution of the area than its 2012 effort.

They argued the Interior Department shouldn’t even consider Shell’s exploration plan before the government enacts new Arctic drilling standards and wraps up investigations left over from Shell’s last effort.

Interior Department staffers are going over Shell’s exploration plan to see whether it’s complete enough for a formal review.

“Exploration in the challenging and sensitive environment of the Arctic must be done cautiously and subject to the highest safety and environmental standards,” said Interior Department spokeswoman Kelly.

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