Obama suspends oil drilling in Arctic Ocean

May 27, 2010 

WASHINGTON -- The Obama administration today suspended planned exploratory oil drilling in the Arctic Ocean off Alaska until at least 2011, a casualty of the Gulf of Mexico oil spill.

The move will stop Shell from drilling five wells in the Chukchi and Beaufort seas off northern Alaska weeks before it had hoped to start work, an administration official told McClatchy Newspapers.

The move will stop for now a controversial expansion of oil drilling in a part of the world that could hold vast stores of oil and natural gas, but which environmentalists warn would come at great risk.

Despite a late appeal from Shell that it would employ new safety measures in the wake of the Gulf spill, Salazar was unconvinced that the exploratory drilling even in the much shallower waters of the Arctic would be safe.

"He is suspending proposed exploratory drilling in the Arctic," an administration official said on condition of anonymity to talk before Salazar's report is officially released today. "He will not consider applications for permits to drill in the Arctic until 2011 because of the need for further information-gathering, evaluation of proposed drilling technology, and evaluation of oil-spill response capabilities for Arctic waters."

Shell, which paid $2.1 billion in 2008 for the leases, had planned to start exploratory drilling in June or July.

Shell Alaska vice president Pete Slaiby said today: "We respect and understand today's decision in the context of the tragic spill in the Gulf of Mexico, but we remain confident in our drilling expertise, which is built upon a foundation of redundant safety systems and company global standards.

"In Alaska, our drilling plans have undergone an unprecedented level of review, including scrutiny from the courts, regulators and stakeholders. We welcome this scrutiny and will work closely with the government and other experts during this suspension in drilling activities."

The decision didn't sit well with Alaska's congressional delegation. All three members were critical in varying degrees.

"All of us are committed to protecting Alaska's waters. I'm also committed to protecting Alaska's economy," Sen. Lisa Murkowski said in a written statement this morning. "If the delay is for a season to ensure we have the highest levels of protection in place, that's one thing. But if it means that existing permits are allowed to lapse - effectively killing Shell's participation in Alaska - that's not acceptable to me or Alaska."Murkowski's statement said she spoke with Shell President Marvin Odum last night "and was reassured that Shell wants to continue to responsibly develop Alaska's offshore resources, but understandably needs firm commitment that the delay will not go beyond next spring."

Sen. Mark Begich said the decision "will cause more delays and higher costs for domestic oil and gas production to meet the nation's energy needs. The Gulf of Mexico tragedy has highlighted the need for much stronger oversight and accountability of oil companies working offshore, but Shell has updated its plans at the administration's request and made significant investments to address the concerns raised by the Gulf spill," he said in a prepared statement. Rep.

Don Young slammed the decision as "irrational and careless."

"I am incredibly disappointed in this irrational and careless decision," Young said in a written statement. "It is based only in response to the hysteria of interest groups that want to cripple our country. The administration's decision is not based on substance but on style and on a hope of being deemed effective, even though their actions will have the opposite effect."

The federal Minerals Management Service estimates that the two Arctic seas hold up to 19 billion barrels of oil and up to 74 trillion cubic feet of natural gas, a combined resource comparable to the onshore fields of Alaska's North Slope.

In a post-Gulf spill pitch to keep its work on track, Shell stressed that the Arctic seas are shallower than the Gulf, that drilling wouldn't have to probe as far into the earth, and that the equipment wouldn't be under as much pressure -- at least for the first years of exploration. Intense pressures in the deep Gulf of Mexico hole contributed to the Deepwater Horizon blowout and subsequent fire and oil spill.

In the Chukchi Sea, Shell said, it would be drilling in 150 feet of water to a depth of 7,000 to 8,000 feet. In the Beaufort, which is also 150 feet deep, it would be drilling to a depth of 10,200 feet.

The Deepwater Horizon rig in the gulf was working through 5,000 feet of water, and then drilling to a depth of 18,000 feet.

On May 14, Shell sent a five-page letter to the Minerals Management Service spelling out how it plans to drill in Arctic waters, how it would prevent a spill, and how it would respond starting within an hour if a spill occurred.

"Shell is committed to undertaking a safe and environmentally responsible exploration program in the Chukchi Sea and Beaufort Sea in 2010," Shell Oil Co. President Marvin E. Odum told the MMS.

"I am confident that we are ready to conduct the 2010 Arctic exploratory program safely and, I want to be clear, the accountability for this program rests with Shell."

Those plans included nine new steps the oil giant has added since the Gulf of Mexico spill, including a policy of testing underwater equipment called a blowout preventer every seven days instead of every 14 days and development of a system to allow a remote-operated vehicle to turn the blowout preventer back on.

"Shell will be ready to respond with oil spill response assets in one hour," Odum told federal regulators, pointing to a three-tier system including an onsite spill team, nearby barges and response vessels and onshore response teams.

He also argued that the brutal weather of the Arctic makes it easier to clean up an oil spill, not more difficult.

"Arctic conditions create differences in responding to oil in cold and ice conditions," he said. "Differences in evaporation rates, viscosity and weathering provide greater opportunities to recover oil."

He said a 2009 project proved that "in Arctic conditions, ice can aid oil spill response by slowing oil weathering, dampening waves, preventing oil from spreading over large distances, and allowing more time to respond."

Environmentalists countered that the harsh environment and the remoteness of the area would make any spill harder to handle, not easier.

"Hazards present in the Arctic can include frigid temperatures, presence of sea ice, gale-force winds, intense storms and heavy fog," said Chuck Clusen, the director of the Alaska project at the Natural Resources Defense Council.

"To date, no technology exists to clean up oil in sea ice conditions. Further, the cold water breaks down oil much slower than the warm Gulf waters. ... The potential for loss in the Arctic is great."

Administration officials noted that Salazar already had been pulling back from offshore drilling in Alaska even before the Gulf spill raised new questions about safety within the industry as well as regulation and oversight from MMS, which resides within his department.

In March, they said, Salazar canceled four remaining lease sales that had been scheduled for the Chukchi and Beaufort seas.

Also in March, Obama put Bristol Bay, one of Alaska's premier salmon grounds, off limits to oil and gas exploration through 2017.

Daily News reporter Richard Mauer contributed to this story.

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