Judge OKs limited exploration for oil in Chukchi Sea

U.S. District Judge Ralph Beistline, responding to a motion filed by Shell Gulf of Mexico Inc., said his order last month that blocked drilling doesn't prevent the seismic studies by Shell that had been approved by the federal government or that were pending approval and planned for this summer. Seismic surveying involves blasting sound waves into the sea floor and reading the echoes off rock formations deep underground in an effort to identify where oil and natural gas might be trapped. Seismic work occurs in advance of drilling.

Shell had wanted to drill wells in the offshore Arctic this summer, opening a possible new oil and gas frontier for Alaska.

In his clarification, dated Monday, Beistline said that properly analyzed activities and work not related to the defects he'd pinpointed last month could proceed.

However, he said he wasn't prepared to lift the prior order blocking drilling and would address other motions in the case "in due course." His clarification did not mention other leaseholders or companies.

July's decision halted development on billions of dollars in leases in the Arctic waters of the Chukchi Sea. Beistline found that the federal government didn't follow environmental law before selling drilling rights. Among other things, he found the government had failed to analyze the environmental impact of natural gas development, "despite industry interest and specific lease incentives for such development," according to court records.

The Obama administration is among those seeking clarification from Beistline, a rare recent case of the administration siding with the oil industry. Interior Secretary Ken Salazar asked the court to narrow the ruling so that another company, Statoil, which owns 16 Chukchi leases, could start seismic testing roughly 100 miles from the coast. Government attorneys told the judge that Statoil, a global oil company partly owned by the Norwegian government, would likely face "significant economic losses" if it couldn't proceed with seismic surveying.

Statoil said Tuesday it might cancel the seismic tests it hoped to do in the Chukchi this summer because it remains unclear whether the company will be allowed to do the work.

Environmental groups said they were stunned by the administration move, which they said undercuts the administration's recent decisions to put the brakes on Arctic exploration in the wake of the Gulf of Mexico oil spill.

And, they said, marine mammals such as whales and walruses can be harmed by the testing. The impact of such tests on marine life was one of the issues the court said the federal government failed to consider adequately before issuing the Arctic drilling leases.

Interior officials said Statoil's tests should be allowed to go forward because they were covered under a different -- and, they say, more complete -- environmental analysis than the Chukchi drilling leases as a whole. That analysis was finished in June, and Interior officials are reviewing it for possible "deficiencies" following the court ruling.

Environmentalists disagreed, saying the Statoil analysis relied heavily on the broader environmental analysis that the Alaska judge cited in blocking the Arctic drilling activities.

The Alaska exploration manager for Statoil, Martin Cohen, said Tuesday that the company has not received all of the permits it needs for its seismic work and doesn't expect to receive them this summer unless Beistline rules in the company's favor.

"It may still be that the court will eventually rule that we can carry out our survey but ... that ruling will likely not arrive in a time frame that allows us to proceed," Cohen said.

"The program is at significant risk of being canceled," he added.

Separately, the state of Alaska asked the judge to reconsider his order that blocked drilling, a request that state Department of Law spokesman Bill McAllister said Tuesday is still pending.

While McAllister said the clarification will preserve Shell jobs for the summer, Gov. Sean Parnell said in a statement there are "enormous consequences for Alaskans if this development is stymied."

"The public interest is in preventing the hardship Alaskans will suffer from lost jobs and economic growth if the injunction remains in place," Parnell said.