Anchorage Daily News

Shell says it's giving up on plans to drill in the Beaufort Sea this year due to an unresolved court challenge.

This marks the second straight year the Dutch oil giant has been forced to shelve its offshore-drilling plans over the court case.

The decision comes only a day after Shell won a hard-fought air pollution permit for its drilling operations from the U.S. Environmental Protection Agency.

The North Slope Borough, the Alaska Eskimo Whaling Commission and environmental groups last year blocked Shell's drilling plans in a court challenge aimed not at the company directly but at the U.S. Minerals Management Service, which regulates offshore drilling.

The groups argue industrial noise and potential spills could hurt migratory whales and the Beaufort Sea ecosystem.

In its announcement today, Shell said it's giving up on drilling this year because the 9th Circuit Court of Appeals in San Francisco has yet to rule on whether MMS approval of the company's 2007-09 exploratory plan was proper.

"Shell believes this is the responsible decision given the continuing uncertainty and need for our workers and contractors to pursue other opportunities," the company said.

Shell intends to proceed with seismic testing in the Beaufort and the neighboring Chukchi Sea.

"We remain committed to this project for the long-term and we consider Alaska a future Heartland for Shell," the company said.

Shell began a surge in Alaska in 2005, leasing thousands of offshore acres and assembling a work force in Anchorage. It hasn't yet drilled any wells.

In February, the company spent a staggering $2.1 billion at a Chukchi Sea lease sale.

Find Wesley Loy online at adn.com/contact/wloy or call 257-4590.

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