Shell Presses for Drilling in Arctic

The Nanuq is part of Shell’s Arctic oil spill response fleet, which would be ready 24 hours a day.

By CLIFFORD KRAUSS

A version of this article appeared in print on November 6, 2010, on page B1 of the New York edition.

HOUSTON — Eager to win approval for its stalled plan to drill for oil in the Alaskan Arctic, Royal Dutch Shell is beginning a public lobbying campaign, including national advertising, on Monday. As part of the effort, the giant oil company is promising to make unprecedented preparations to prevent the kind of disaster that polluted the Gulf of Mexico earlier this year.

Shell’s plan to drill in Alaska’s Beaufort and Chukchi seas has been snarled in regulatory delays and lawsuits for four years. The company has already invested $3.5 billion in the projects, and it was close to overcoming the final regulatory hurdles to begin drilling when BP’s Macondo well blew out April 20, killing 11 rig workers and spilling millions of barrels of oil into the gulf.

In response to the gulf accident, the Obama administration suspended most new offshore drilling, including in the environmentally sensitive waters of the Arctic.

But now that the moratorium on gulf drilling has been lifted, Shell is pressing the Interior Department to grant final approval for its Arctic projects by the end of this year so that the company has enough time to move the necessary equipment to drill next summer, when the waters offshore are free of ice.

“Every day we’re delayed, we’re delaying jobs and energy development,” Peter Slaiby, Shell’s vice president for Alaska, said in an interview.

“It’s a crushing irony that the Gulf of Mexico moratorium is lifted and we are not allowed to move forward.”

The gulf disaster raised public and government awareness of the risks of catastrophic spills from offshore wells. The waters off Alaska are considered particularly tricky because of the long periods of daytime darkness, periods of months when ice would block the movement of relief ships and the fragility of ocean habitats for whales, polar bears and other species.

“We are opposed to drilling until we get sufficient science that demonstrates that you can do it truly safely,” said Chuck Clusen, director of the National Parks and Alaska projects at the Natural Resources Defense Council.

Shell said its emergency response plan was far more robust than the one BP had in the gulf.

“We’re not a tone-deaf company,” Mr. Slaiby said. “We’ve really got to be compelling in what we are doing.”

Shell’s new marketing campaign promotes an “unprecedented spill response approach” including a sub-sea containment system, an upgrade of the drilling rig’s blowout preventer and an enhanced response plan that include teams and equipment at the ready 24 hours a day.

The containment system would include a dome that could be placed over any leak, and a funnel to take any escaping oil to surface ships. A rig would be at the ready to drill a relief well if needed.

“We’ve opted out of the fire department type of approach,” Mr. Slaiby said. “Our assets can be on site and deployed within one hour.”

Shell has also scaled back its initial drilling plans to just one or two wells in the Beaufort Sea. It is postponing drilling in the more remote Chukchi Sea pending separate legal challenges.

The company has the support of Alaska’s state government, which is suing the federal government to overturn the drilling suspension.

Gov. Sean Parnell said the suspension was illegal because the Interior Department did not consult with state officials or consider the local economic consequences.

A federal district court judge in Alaska gave the Interior Department a deadline of Friday to respond to the Alaska suit, with a hearing planned for the end of the month.

The Justice Department responded Friday night with a filing that argued that the state did not have standing to sue in the matter, and that the Interior Department was in the process of considering the application.

“We are taking a cautious approach,” said Kendra Barkoff, an Interior Department spokeswoman.

“Alaska represents unique environmental challenges. We need additional information about spill risks and spill response capabilities.”

Shell’s campaign appears aimed at increasing pressure on the Obama administration to approve the plan. The company is placing ads for the rest of the month in national newspapers, liberal and conservative political magazines and media focused on Congress.

For Shell and others in the oil and gas industry, nothing less than the revival of Alaska’s oil history is at stake.

Alaska is the second-biggest oil-producing state after Texas, but it has suffered a steady production decline since 1988, when output peaked at 2.1 million barrels a day.

With its North Slope fields long past their prime, the Arctic National Wildlife Refuge off-limits to drilling and offshore wells largely untapped, the state today produces about 680,000 barrels a day and the Trans-Alaska Pipeline System is running at one-third of capacity.

To make matters worse, the United States Geological Survey last month cut previous estimates of oil reserves in Alaska’s National Petroleum Reserve, an area preserved by the federal government in case of national emergency, by about 90 percent, to 896 million barrels, approximately what the country consumes in six weeks.

Industry officials say there are as many as 25 billion barrels of oil reserves in the Alaskan Arctic. At the moment, there has been no offshore drilling in Alaskan federal waters since 2003, although there is some production from older wells.

Companies wanting to drill face heavy drilling costs, local opposition and legal challenges from environmental groups that say a potential blowout could endanger critical feeding and spawning grounds for a variety of Arctic species and warn that rough Arctic seas would complicate any containment and cleanup operations.

Mr. Clusen of the resources council noted that a blowout at Shell’s project would cause a slick on barrier islands that are critical birthing areas for polar bears in the winter.

He urged that Shell be obliged to rewrite its exploration documents to include the new response plans and allow the Interior Department’s Bureau of Ocean Energy Management, Regulation and Enforcement to formally review “whether that response is adequate or not.”

Shell hopes that Chukchi Sea leases it acquired for $2.1 billion in 2008 could eventually produce as much as 400,000 barrels of oil a day. The holdings in the Beaufort Sea are probably less bountiful, but could eventually produce as much as 100,000 barrels a day.

Shell executives insist that drilling in Arctic waters is safe. They say they will be drilling in 100 to 150 feet of water in the Beaufort Sea, compared with depths of 5,000 feet and more in the gulf, which means that the equipment will be subject to far less pressure.

SOURCE

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