Shell considering 2nd attempt to drill off Alaska’s Arctic coast

October 31, 2013

Shell Oil said Thursday that it would try — again — to drill for oil in the Chukchi Sea off Alaska’s Arctic coast, where last year ice and late permits forced its rigs to abandon the area without completing a well.

Shell said it had not made a final decision about drilling next summer, but it said that it would file an updated exploration plan with the Interior Department in the next couple of weeks. Its new program will limit drilling to the Chukchi Sea and postpone plans to drill in the Beaufort Sea as well. The company said that it would lease Transocean’s Polar Pioneer drilling rig as well as the Noble Discoverer rig it used earlier.

“Our decision to resume exploration will be driven by our readiness to do so safely, not by the need to meet arbitrary timelines,” said Shell spokesman Curtis Smith.

Shell’s effort to drill in the Chukchi Sea is an expensive, long-running saga. Shell has spent several years and nearly $5 billion to buy leases, fight environmental groups in court and prepare to drill in an area about 70 miles off the Alaska coast.

In the summer of 2012, however, Shell was thwarted by ice and trouble meeting permitting standards. Later, on its way to a warm water port, one of Shell’s drill ships, the Kulluk, ran aground and later needed repairs.

“Just because they have a new piece of equipment, that’s not evidence that they’re going to have any fewer problems than they had in 2012,” said Lois N. Epstein, the Arctic program director for the Wilderness Society. “The environment is still very hazardous and risky.”

Shell also had trouble obtaining an air permit from the Environmental Protection Agency for the emissions from the drill ships. Shell paid $1.1 million in fines for air quality violations.

But in 2012, Sen. Lisa Murkowski (R-Alaska), a supporter of expanded drilling on federal lands and waters, attached a rider to the Interior appropriations bill that moved authority for the air permit to Interior’s Bureau of Ocean Energy Management.

A spokesman for Murkowski, Robert Dillon, said that Interior already had air permitting authority for offshore drilling in the Gulf of Mexico and that Murkowski “felt DOI could do a better job without any loss of protection.”

Steven Mufson covers energy and other financial news.
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