DELAY: The court order is a victory for those who argue the project will drive bowhead whales away.
Shell's ambitious plan to drill exploratory oil wells in the remote Beaufort Sea might be doomed -- at least for this year -- after a federal appeals court on Wednesday ordered further delay for the project.
It's a costly setback for the Dutch oil giant, which has a fleet of drilling ships and support vessels poised and waiting in Alaska and Canadian ports.
The court order is a victory for environmental groups and North Slope residents who argued oil industry noise could drive migratory bowhead whales out of reach of Native subsistence hunters, and who accused federal regulators of doing shoddy environmental studies of potential harm from drilling to whales, polar bears and birds.
"We are pleased that the court has granted this injunction and we are satisfied that Shell will not be drilling in the Beaufort Sea this year," said Rachel James of the conservation group Pacific Environment.
A three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco ruled the challengers, who sought to block a federal agency's February approval of Shell's drilling plans, "raised serious questions and demonstrated that the balance of hardships tips sharply in their favor."
The panel ruled Shell can't drill until the case plays out. Although the judges ordered the case to be speeded up, they indicated it won't be resolved before early December.
That would effectively kill Shell's drilling plans for this year, because by then the Beaufort Sea likely will be frozen, locking out drill ships that need mostly open water to operate.
Wednesday's ruling extends the hold the court first imposed on Shell's operations July 19.
Shell spokesman Curtis Smith said the company was reviewing its legal options and would not demobilize its fleet just yet.
"We are disappointed, and hope the court's ruling will not have an adverse effect on the Alaska economy -- most notably the hundreds of jobs that would be created if Shell is successful in Alaska," he said.
The Beaufort Sea remains largely a frontier zone, with most of Alaska's oil produced on land from large fields such as Prudhoe Bay, Kuparuk and Alpine.
Shell had planned to drill three wells at a prospect called Sivulliq, located about 16 miles offshore just west of the Arctic National Wildlife Refuge.
The area previously was explored in the mid-1980s, with the government estimating that Sivulliq could hold 200 million barrels of crude. But oil companies abandoned and ignored the site until Shell showed renewed interest in the last couple of years.
Managers note the price of oil is much higher now, possibly justifying development if additional drilling proves the deposit is large enough.
"I am very disappointed in the 9th Circuit Court of Appeals ruling blocking Shell Oil Company from drilling in the Beaufort Sea," Gov. Sarah Palin said in a statement issued Wednesday. "This is the second development project with costs exceeding $200 million to be blocked by an action by this court. Decisions such as these pose a threat to our economic future. Nevertheless, I remain committed to help responsible parties develop Alaska's resources in a manner that protects our way of life."
In May, the appeals court held that the planned Kensington gold mine northwest of Juneau would violate the Clean Water Act.
The U.S. Minerals Management Service in February approved Shell's three-year Beaufort Sea exploration plan and issued a "finding of no significant impact."
The agency's Alaska director, John Goll, said in a recent interview that the agency thoroughly studied the risks of drilling and that thousands of exploratory wells have been drilled in U.S. offshore waters over the last 35 years without any major spills.
But others say Arctic Ocean drilling is ill-advised.
"We are glad to see that the court is keeping the Minerals Management Service in check," James said. "There is simply no excuse for our federal government to fast-track risky offshore oil drilling at the expense of Arctic wildlife and communities."
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