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Federal court vacates Alaska denial of Beaufort oil drilling proposal

Published Sunday, March 8, 2009

ANCHORAGE, Alaska – A federal appeals court has vacated an opinion issued last year that halted Shell Oil Co. drilling plans for the Beaufort Sea off Alaska’s northern coast, leaving both sides in the case wondering what the action means.

The 9th U.S. Circuit Court of Appeals on Friday gave no indication whether a change in the Nov. 20 ruling would mean exploration drilling will be allowed, or whether the ruling by a smaller panel of the court’s judges will be replaced with a similar decision.

“It’s impossible to know what the intent of this decision could mean,” Shell spokesman Curtis Smith said Saturday.

Mike Bybee of the Sierra Club in Washington, D.C., said he was surprised the decision was vacated, given its succinct conclusions on the cumulative effects of industrial development.

“We felt that the argument in the original decision was very clear,” he said Sunday.

A panel of the court in November concluded that the federal Minerals Management Service improperly granted Shell permission for exploratory drilling in the Beaufort Sea.

Judges ordered the MMS to reconsider how drilling would affect wildlife and Inupiat Eskimo subsistence hunting and fishing.

Conservation groups hailed the ruling and said it demonstrated that the Bush administration had rushed to approve Shell’s drilling program in the Arctic Ocean without a full review of its effect on whales and subsistence way of life for people in the region.

Subsistence hunters and fishermen said birds and animals could be affected by industrial activity and the marine operations needed to support it.

The 9th Circuit panel in November said MMS did not provide convincing reasons why Shell’s exploratory drilling plans at specific sites would have an insignificant effect on bowhead whales and their migratory routes. The judges concluded that the agency’s attempt to rely on a monitoring program as a mitigation measure was “ill-founded.”

MMS officials disputed the ruling and said the agency had extensively analyzed potential impacts to wildlife.

Shell asked for a review by the entire 9th Circuit court. The company postponed exploration for 2009 on leases it holds in the Beaufort Sea and the Chukchi Sea off Alaska’s northwest coast.

Shell Exploration & Production Co., part of Royal Dutch Shell PLC, in 2005 spent more than $44 million for 84 offshore leases in the Beaufort Sea.

MMS in February 2007 approved an outer continental shelf exploration plan submitted by Shell Offshore Inc. Shell proposed to drill up to 12 exploration wells on 12 tracts over three years. Smith said Shell will continue to meet with communities on Alaska’s North Slope about its exploration plans. It already has modified plans for 2010, he said.

“North Slope leaders requested that Shell take a more measured approach to the offshore and we will answer in 2010 with a one-rig program instead of the two drilling rigs we originally had planned on,” he said.

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