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Petroleum News: Court denies Shell’s petition

Vol. 12, No. 38  Week of September 23, 2007

9th Circuit reaffirms temporary injunction against Beaufort Sea drilling until 3 appeals against Shell’s exploration plan resolved

Alan Bailey
Petroleum News

The controversy surrounding the push spearheaded by Shell to extend oil and gas development into Alaska Arctic offshore revolves to a considerable extent around fundamental issues relating to the world’s endless appetite for energy and the concerns of an ancient but fragile Native Arctic culture.

But Shell would seem to be running out of options to salvage its plan to drill three wells in its Beaufort Sea Sivulliq prospect during the 2007 open water season. On Sept. 13 the U.S. Court of Appeals for the 9th Circuit denied the company’s petition to reconsider the court’s temporary injunction on the drilling activities until the settlement of three appeals to the court against U.S. Minerals Management Service approval of Shell’s Beaufort Sea exploration plan. And because the hearing schedule precludes a ruling on the appeals until December, by which time ice will likely cover the Beaufort Sea, the injunction effectively nixes any possibility of Shell starting its drilling in 2007.

“We’re disappointed,” Shell spokesman Curtis Smith told Petroleum News Sept. 14. Smith said that Shell is still assessing its options following the Sept. 13 court decision. The company takes a long-term view of its Alaska operations, Smith said.

Prior to that decision Shell had already started to stand down the contract personnel from the fleet of vessels that the company had assembled for its drilling program, although that stand down did not preclude the possibility of carrying out at least part of the 2007 program, were the court to lift its ban. And the company is retaining communications centers and a cadre of marine mammal observers to support its ongoing seismic surveying program in the Chukchi and Beaufort Seas.

Concerns about impacts

The North Slope Borough, the Alaska Eskimo Whaling Commission and several environmental groups raised the appeals with the 9th Circuit Court, expressing concerns about the potential impact of offshore drilling on subsistence hunting and on the environment.

Mayor Edward Itta of the North Slope Borough has said that the borough wants to work with industry to find solutions to the borough’s concerns but that industry is trying to move too fast into offshore developments that could impact the Native ways of life. The mayor has convened an oil and gas forum in Barrow from Sept. 19 to Sept. 21 to identify issues with oil and gas development and to seek solutions to those issues.

And although the borough has expressed an understanding of the drive to develop more oil and gas resources in the Arctic, the borough is also concerned about the damage that oil and gas development might cause to the traditional culture of the Native peoples.

“We need you to understand that you cannot separate the ocean from us. … We are tied in intricately,” Itta has said.

Shell for its part has been communicating with North Slope communities and has been planning for the mitigation of possible impacts of its Beaufort Sea exploration program. Mitigation measures include the deployment of passive acoustic arrays at intervals out from the coast, the use of about 70 locally recruited marine mammal observers, use of aerial wildlife monitoring and the operation of communications centers, manned by local residents, in all North Slope villages.

“We’re committed to good communications and constant dialogue with the people representing the whaling captains and with the agencies. … We’ll be adjusting and adapting all the time. … If communications are there you can work through a lot,” Rick Fox, Shell’s asset manager for Alaska, told Petroleum News in February.

The company has also contracted a new oil spill response vessel, an oil spill response barge, a large inventory of oil spill response equipment and a double-hulled oil tanker as contingency against an oil spill during drilling operations. And as part of a conflict avoidance agreement with the Alaska Eskimo Whaling Commission, Shell had agreed to cease drilling operations during the fall Cross Island bowhead whale hunt.

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