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Shell Alaska drops plan for Arctic offshore drilling this year

Company officials blame federal regulatory delays; environmental and Native Alaska groups have been fighting the project.

February 03, 2011|By Julie Cart, Los Angeles Times
  • Shell Vice President Peter Slaiby, at a news conference at Shell offices in Anchorage, cited "continuous regulatory delays" in the decision not to start the Beaufort exploratory drilling.
Shell Vice President Peter Slaiby, at a news conference at Shell offices… (Dan Joling, AP Photo )

Shell announced Thursday it would not conduct exploratory drilling in Arctic waters off Alaska this year after a ruling last month revoked federal clean air permits that would have allowed drilling ships and support vessels to operate in the environmentally sensitive region.

Lawyers representing Alaska Native and conservation groups succeeded in challenging permits granted to Shell by the Environmental Protection Agency for exploratory drilling in the Beaufort and Chukchi seas. The federal Environmental Appeals Board ruled last month that the EPA's analysis of nitrogen dioxide emissions from the drilling ships was too limited. The board ordered the agency to redo the work.

Shell Alaska Vice President Peter Slaiby on Thursday blamed the decision not to start the Beaufort exploratory drilling this year on "continuous regulatory delays." He said the company had spent more than $50 million to secure the EPA permits.

Royal Dutch Shell has tried for five years to begin work in Arctic seas off Alaska, which poses both environmental and logistical challenges. Environmental groups have opposed the drilling, citing a host of unknowns involved in energy exploration in such an extreme and remote environment. Criticism has increased with the decline of the polar bear, whose habitat encompasses the would-be oil fields.

Shell had been putting pressure on the Interior Department to allow drilling in Arctic waters at a time when federal regulators were reviewing all energy exploration after the BP well blowout in the Gulf of Mexico. Federal officials have questioned how oil companies operating in the Arctic would handle a similar drilling accident. Slaiby said a "significant portion" of more than $3 billion Shell had invested in the project had been dedicated to a spill response program.

Alaska's congressional delegation expressed disappointment in the delay, saying the work would have created 800 jobs and thousands more over the years.

Sen. Lisa Murkowski (R-Alaska) said in a statement that the Obama administration's regulatory decision would "result in all of us paying more for gasoline — not to mention the loss of jobs and revenue that responsible development bring."

"We talk a lot about the economy, but rarely do our actions match our rhetoric. That's unfortunate," she said.

Environmental groups were ecstatic, saying more study needs to be done before drilling is allowed.

"The bottom line is that there is no known way to clean up an oil spill in the Arctic's conditions, and too little is known about the Arctic's marine environment," said Cindy Shogan, executive director of the Alaska Wilderness League. "If there's one lesson we've learned from the gulf spill, it's that we can no longer rely on the oil industry's shallow assurances."

julie.cart@latimes.com

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