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Arctic oil: US to expand offshore leasing in northern Alaska waters

Craig MedredAlaska Dispatch

U.S. Interior Secretary Ken Salazar announced Tuesday the federal governmental will soon release its five-year offshore lease program, building on a vast expansion in the 2000s to open Alaska's Arctic to exploratory oil drilling.

After years of opposition from environmental activists and some Alaska Native groups, Royal Dutch Shell is hoping to begin exploratory drilling this summer off the Arctic shores of Alaska. Salazar, according to the Los Angeles Times, "made it clear that the U.S. plans to expand the march of drilling rigs into the Arctic after Shell’s initial exploratory-drilling program this summer."

The New York Times reports that following an equipment demonstration held this week by Shell, Salazar said he believes the company’s claims that it could collect at least 90 percent of any oil spilled in the event of a well blowout. "I think the response capability is there to arrest the problem very quickly and minimize damage. If I were not confident that would happen, I would not let the permits go forward,” he said.

The new federal lease program, which would cover the Chukchi and Beaufort seas and begin in 2016 and 2017 respectively, is expected to win final federal approval in the coming days.

“The upcoming Arctic Ocean lease sales in the Chukchi Sea in 2016, and in the Beaufort Sea in 2017, are premature and technically problematic,” Lois Epstein, Arctic program director for The Wilderness Society, said in a statement in response to Salazar's announcement. Epstein cited a lack of cleanup technologies for the type of spill that could occur in the Arctic Ocean, an absence of an arctic-specific offshore drilling standards, and the lack of a buffer area as reasons not to expand offshore Arctic drilling programs.

Shell announced Tuesday that federal offshore oil regulators "witnessed the deployment of the capping stack that will join Shell’s drilling fleet in Alaska" this summer, according to Alaska company spokesman Curtis Smith. "The successful deployment of Shell’s Arctic capping stack in Puget Sound means we are nearing the end of an extremely thorough inspection and permitting process that would allow for exploratory drilling in the Beaufort and Chukchi Seas this summer."

He added: "While we remain confident in our pre-staged, three-tier oil spill response capability, Shell’s Arctic-engineered capping system will allow for the capture of hydrocarbons at the wellhead in the very unlikely event of a blowout."

Meantime, Oregon Public Broadcasting reports that some investors who had been eyeing Arctic oil development may be getting cold feet:

WestLB, a key German bank for the energy sector, has quietly changed its lending policies to exclude operations in the far north. It says the "risks and costs are simply too high".

And the Lloyd's of London insurance market has just issued a report warning that offshore drilling in the Arctic would "constitute a unique and hard-to-manage risk". It urged companies to "think carefully about the consequences of action" before exploring for oil in the region.