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Blanket moratorium on Arctic drilling not justified, panel says

The White House-appointed oil spill commission on Tuesday said gaps in research about Arctic waters do not justify a "de facto moratorium" on oil and gas development off Alaska's northern coast.

However, the commission declined to weigh in on the most pressing matter involving drilling in Arctic waters: Royal Dutch Shell's ambition to drill wells in the Chukchi and Beaufort seas this summer.

The seven-member commission -- including one Alaskan, outgoing University of Alaska Anchorage chancellor Fran Ulmer -- published its final report on last year's fatal explosion and massive leak from a Gulf of Mexico oil exploration rig on Tuesday.

The commission's task included advising the federal government on how to reduce risks from offshore oil and gas development, including in the Arctic.

"It's a high-risk business but we can make it safer," Ulmer said.

The report said new offshore Alaska oil production might help offset the decline in output elsewhere in Alaska, but it needs to be developed with "the utmost care."

The commission took into account lessons from the 1989 Exxon Valdez tanker spill, the biggest spill in U.S. waters until it was eclipsed by BP's rig disaster last summer, Ulmer said in an interview.

For example, the 398-page report recommends creating citizens' councils in the Gulf region similar to the ones that watchdog the oil industry in Prince William Sound and Cook Inlet.

An citizens' council to monitor Arctic drilling would also be useful, Ulmer said.

Dozens of Alaskans with expertise in preventing, cleaning up and studying the toxic impact of oil spills contacted Ulmer and offered valuable input to the commission, she said.

"I could help connect people. I think that was part of why I was appointed in the first place, so that the lessons from that tragedy could help in this tragedy," she said.

During her travels to the Gulf region as a commissioner, Ulmer said she saw a number of Alaskans assisting with the cleanup. Meeting with the Gulf region's residents, she said she saw from them the same tears and feelings of loss and betrayal that she observed in Alaska 20 years ago as a state legislator in the aftermath of the Exxon spill. Ulmer served on a legislative committee that investigated the Exxon spill.


Despite previous boasts about the offshore oil industry's track record in U.S. waters, the fatality rate is four times higher in U.S. waters than in European waters, Ulmer said, citing data the commission collected from industry trade groups.

If Congress doesn't enact drill-rig safety reforms -- as it did to improve tanker safety after the Exxon spill -- more major spills from rigs will occur, she said.

U.S. Sen. Mark Begich, D-Alaska, applauded the report, and said he's pleased by the finding that an Arctic moratorium is not justified. But some environmental groups said Tuesday they are pessimistic that Congress will accept the commission's recommendations. The groups are trying to convince regulators that Shell's drilling plans should not be allowed.

A Shell executive in Alaska said the commission's report doesn't send a message that anything is amiss with the company's spill response plans or exploration proposed for this year.

"We're grateful that at least implicitly, Shell's work is acknowledged to be best practice," said Peter Slaiby, the Shell executive.

The national Center for Biological Diversity, which has sued to block development, called for an immediate stop to offshore development in the Arctic until the commission's recommendations are implemented.

"Unfortunately, there is no indication that the new Congress will provide the funds needed for adequate governmental oversight nor will it enact (liability) provisions to help prevent future offshore drilling catastrophes," said Lois Epstein, Arctic program director for the Wilderness Society.

That means more accidents, including in the Arctic Ocean, Epstein said.


Arctic drilling was one of the most difficult and fractious issues examined during the commission's six months of work, which included a listening session in Anchorage last year, the commission said.

But, weighing in on Shell's drilling proposals for the Beaufort and Chukchi seas was not the commission's job, it said.

"We felt we didn't have all of the information one should have to make those decisions (about Shell), and we weren't asked to do that by the president," Ulmer said.

Shell in 2008 paid more than $2 billion for its oil exploration leases in the Beaufort and Chukchi.

After several years of litigation and opposition from some North Slope villages and environmental groups, the oil giant had hoped to drill wells in the Beaufort this summer. But to do that, the company still needs permits and other authorizations from federal agencies. Regulators recently pulled one of the key permits to make changes.


Though the commission did not weigh in on Shell's proposals, it did consider what the government should do before auctioning additional leases in the Arctic for oil and gas development.

Many of the commission's findings released on Tuesday on the Arctic echo previous statements made by regulators and watchdog groups.

For example, the commission joined others who have repeatedly raised concerns about gaps in knowledge about the Arctic environment and the difficulty of mounting a major cleanup due to lack of ports, roads and air strips in the remote region.

It's possible that oil spilled in the Arctic will be easier to skim or burn, but the low temperatures mean oil that can't be cleaned up will persist much longer in the environment, the report said.

"Serious questions remain about how to access spilled oil when the area is iced over or in seasonal slushy conditions," the report said.

Slaiby, the Shell executive, pointed out Tuesday that the company plans to drill exploration wells in the summer season, when there is no ice.

But he agreed that additional scientific studies would be needed before the company decides to produce oil from its leases.

Here are some of the commission's Arctic-related recommendations to the federal government:

• Set a "specific time frame" to address gaps in Arctic research -- such as plotting the trajectory of oil spilled in various weather conditions.

• Immediately create a wide-ranging research effort to help regulators make decisions about offshore oil development and monitor its impacts on the environment.

• Fund an interagency research program on oil-spill cleanups in the Arctic.

• Provide resources for the U.S. Coast Guard to respond to spills in the Arctic, and pre-emptively determine who would be in charge of a spill response.

• Engage in developing international standards for oil and gas activity to be shared by all Arctic nations.


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