Alaska Gov. Sean Parnell used a Wall Street Journal commentary over the weekend to urge the Obama administration to make a fair assessment of Shell Oil's Arctic drilling program.
After poor weather and towing complications grounded the Kulluk, one of the company's two Arctic drilling rigs, the Interior Department announced it was undertaking an “expedited assessment” of Shell's 2012 activities in Alaska's northern waters, the outcome of which could potentially jeopardize necessary permits to continue the drilling program.
Parnell is critical of the federal review, noting none of Alaska's nearly 600 other vessel casualties in 2012 resulted in an Interior Department review. And, he's concerned the review – if skewed or unfair – has the potential to derail Shell's nearly $5 billion effort to tap offshore oil in Alaska's Arctic.
In his commentary, Parnell points out that the grounding occurred 1,000 miles away from any oil and gas exploration. He also argues that while the grounding was purely a marine transportation accident, it is “being exploited for political purposes in an effort to halt offshore exploration in Alaska.”
"For Alaska's economy and America's energy security, I hope Shell and other energy producers choose to keep their drilling operations in Alaska," Parnell wrote. "But they are rightly concerned about federal hurdles (in the form of permitting delays, investigations, etc.) as they consider whether to drill in Alaska or move investment dollars abroad under more favorable regulatory conditions."
Yet Shell itself may not be at the same level of hand-wringing as Parnell would have the nation believe. On Jan. 31, Shell Chief Executive Peter Voser revealed the grounding, salvage and ongoing recovery of the Kulluk had already cost $90 million, not including anticipated repairs. And although Voser would not speculate on whether the Alaska drilling fleet would be in working order in time for the 2013 drilling season, he acknowledged the Arctic remains a sensible place for the company to do business.
According to the Financial Times, “Mr. Voser insisted that despite the short-term problems, it made sense for Shell to be in the Arctic, saying it contained roughly 20 percent of the world’s yet-to-be-discovered oil and gas resources.”
Read the governor's full opinion piece at the Wall Street Journal.
Contact Jill Burke at jill(at)alaskadispatch.com