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Shell gets conditional OK for Beaufort Sea drilling plan

The Obama administration has given conditional approval to Shell Oil's plan to explore two of its leases in the Beaufort Sea next summer and fall, federal regulators said Monday.

The federal Minerals Management Service said it will allow Shell to drill for oil and gas in the far western area of Camden Bay, west of Kaktovik, if certain conditions are met. For the project to go forward, it must comply with state and federal environmental requirements and Shell needs to obtain a drill permit from MMS, the service announced Monday.

Shell is also seeking permission to drill one or two wells on its leases in the Chukchi Sea next year. Alaska Native organizations and environmentalists have sued to block the drilling, and under court order, the MMS is revising its analysis of the company's plans for its Chukchi leases.

National environmental groups said the latest decision ignores threats to the Arctic environment and its wildlife, and at least one of them said a lawsuit challenging it was likely.

MMS officials said Monday they are committed to responsible development.

"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," said MMS Director Liz Birnbaum.

Shell's plan is less ambitious than what the global oil giant had envisioned a few years ago after purchasing the leases. In 2007, the company said it wanted to drill more than a dozen wells in the area. But the company faced opposition from some North Slope village leaders and environmentalists. In a pending lawsuit, North Slope communities and environmental groups are trying to block Shell's plans for additional drilling in Arctic waters.

Shell said it plans to drill two wells between July and October on its Camden Bay leases, and hasn't decided yet whether to pursue additional drilling in the Beaufort in future years. The company agreed to suspend drilling and take its vessels out of the area in August during the fall subsistence bowhead whale hunts by two villages, Kaktovik and Nuiqsut.


Environmentalists said Monday that it's still possible to file a lawsuit to block Shell's proposed drilling in the Beaufort.

"Litigation is certainly likely," said Rebecca Noblin, a staff attorney in Anchorage for the Arizona-based Center for Biological Diversity, one of many groups contesting Shell's other leases.

U.S. Sen. Mark Begich, D-Alaska, praised the MMS Monday morning before the agency had made its decision public.

Begich said the decision showed that the Obama administration and Ken Salazar, the secretary of the Interior who is in charge of the MMS, "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."

U.S. Sen. Lisa Murkowski, R-Alaska, said Monday that the MMS announcement was "an encouraging sign."

A Shell executive in Alaska called it a positive step toward drilling next year.

"We sincerely believe this exploration plan addresses concerns we have heard in the North Slope communities which have resulted in the programs being adjusted accordingly," said the executive, Pete Slaiby, in a prepared statement.


Environmental groups claim the Arctic and its marine mammals already are under stress from global warming and the loss of sea ice.

"Obama could have installed Sarah Palin as secretary of Interior and the polar bear and Arctic ecosystem would be no worse off than it is under Ken Salazar," said Brendan Cummings, an attorney for the Center for Biological Diversity. In addition to contesting oil drilling in the Arctic, his nonprofit successfully petitioned to list polar bears as threatened under the Endangered Species Act.

The company's drilling operations include using the Frontier Discoverer, a drill ship that MMS said has been retrofitted and ice-reinforced for operations in Arctic waters.

But petroleum companies have not proved they can clean up a spill in Arctic conditions, especially broken ice, Cummings said. Boom and other measures used to contain oil in open water were ineffective in tests off Alaska's coast. Just getting equipment to a catastrophic spill in the Beaufort, which has few support facilities and some of the worst weather and light conditions in the world, would be challenging.

"Survival of the polar bear in the Beaufort Sea is already tenuous," Cummings said. "Any additional stress such as the noise disturbance from the drilling itself and the risk of a catastrophic spill takes us in a wrong direction."

But Shell's Alaska spokesman Curtis Smith responds, "Shell has assembled the most environmentally sensitive and thoroughly responsible exploration plan in history. That includes a world-class oil spill response fleet that would be on-site 24/7 in the extremely unlikely event of a spill."

He said Shell and industry partners continue to make advances in spill prevention and response technology.

"Recent trials in Norway again substantiate the majority of oil spilled on ice-covered waters can be removed," he said.

The two leases are about 16 and 23 miles north of Point Thomson.

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

Spokesmen for Oceana and Ocean Conservancy said MMS approved Shell's Beaufort plan despite a substantial and recognized lack of science or planning. The approval continues failed policies that led federal courts to invalidate the approval of the current five-year leasing program, the groups said.

Oceana said the decision conflicts with the Obama administration's recent commitments to careful, science-based decision-making in the Arctic.

This story was reported by Dan Joling of The Associated Press and Daily News reporter Elizabeth Bluemink.

Daily News staff and wire reports