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Lawsuits have cost Shell hundreds of millions of dollars in Alaska

Will waves of tired walruses erode industry’s future in the Arctic?

Jill Burke

Jan 1, 2010

Almost seven years ago, the polar bear leaped into the national climate change debate, a poster child of an increasingly melting Arctic, perhaps fueled by humans. Environmentalists championed the bear’s plight, successfully encouraging federal wildlife managers to list polar bears as a threatened species.

Now another iconic Arctic animal is poised to take center stage. Losses to Arctic sea ice are causing Pacific walruses to change how they spend their time, making their journeys more perilous. Just as the polar bear’s listing sounded alarms in Alaska’s oil industry, which has been pushing for offshore exploration in the Beaufort and Chukchi seas, companies are closely watching how federal wildlife managers deal with the concerns for the Pacific walrus.

Policymakers face tough questions about how to balance the walrus’ habitat against oil development, shipping and even subsistence hunting. As the ice retreats new shipping routes are opening up, and buried in the depths below, untapped oil and gas deposits await exploration.

Earlier this week, the U.S. Fish and Wildlife Service issued findings showing Alaska’s polar bears are in decline, and that the Pacific Warlus may threatened, too. But what to do about those observations has Alaska’s governor and others at odds with the federal agency.

Several animals in Alaska’s arctic already qualify for some level of federal protection, or are under consideration for protection. Bowhead whales are listed as endangered; polar bears and spectacled and Steller’s Eiders are listed as threatened. Pacific walruses, Ice seals and Yellow-billed loons are under consideration for protection under the Endangers Species Act.

Alaska Gov. Sean Parnell recently launched a high-profile fight against the Fish and Wildlife Service’s recommendation to designate more than 200,000 square miles of land and adjacent ocean as critical habitat for polar bears, arguing it’s too broad of a region and that the recommendation doesn’t factor the potentially negative impacts to oil and gas exploration and development, such as job losses. State Attorney General Dan Sullivan asserted in a recent statement that any such designation that fails to consider economic impacts alongside species protection is unlawful.

Meanwhile, conservation groups are bristling at approved oil exploration plans in the Beaufort and Chukchi seas, home to polar bears and walruses, for 2010. “If this administration is serious about saving these last great icons of the North, it must bid farewell to harmful Bush-era drilling plans for the Arctic,” said Rebecca Noblin in a press release from the Center for Biological Diversity, a conservation group leading many of the charges to protect Arctic wildlife and habitat. “A rational approach to polar bear and walrus conservation does not include turning their habitat into a polluted industrial zone.”

Yet, balancing protection for the Arctic’s animals and the quest for the energy riches it holds may be hard to strike in such a swiftly changing region.

Already, lawsuits and false starts caused by legal challenges have cost Royal Dutch Shell – the company that has shown the most interest in offshore oil exploration in Alaska — hundreds of millions of dollars, as well as sent a message to other companies that the state’s northern waters may not be worth the costly fight to develop anytime soon.

In a state that depends on oil for jobs and tax revenue, this prospect has many top officials concerned for the future. Oil production is in decline, while the debate over how to protect a changing Arctic frontier and its animals has placed the state and industry’s crude dreams in jeopardy, some say.

As oil and gas producers search for new opportunities, hard truths are a constant shadow. Companies can take their hunt for hydrocarbons to areas of the world with less regulatory resistance, and as the pursuit of energy reserves leads increasingly toward the Arctic — estimated to hold billions of barrels of oil — political and operational challenges increase.

Shell has spent more than $3 billion dollars on leases in the Beaufort and Chukchi seas, and the lease zones fall within the proposed critical habitat for polar bears. Company officials worry about the potential for long delays and increased costs for current exploration plans and future oil and gas production.

Shell believes the proposed critical habitat designation could be much smaller, excluding all open water, and land with the exception of bear den sites, said Shell spokesman Curtis Smith. Taking steps to avoid impacts to marine mammals isn’t new territory for Shell; for years it has done it with the bowhead whale, but as more species qualify for federal protection, the challenges of operating in the Arctic are becoming more frequent, he said.

As it wrestles with the implications of polar bear protection, another large marine mammal may complicate Shell’s plans.

For Pacific walruses, sea ice offers a place to birth, nurse and rest between feedings. As ice retreats from the continental shelf and into waters too deep for walruses to feed, herds are forced to haul out on shore, say U.S. Geologic Survey scientists who are studying the animal’s response to its changing world.

Sometimes the consequences of those shifts in behavior can be fatal. In September, 131 Pacific Walruses were found dead along the shores of the Chukchi Sea near Icy Cape in Northwest Alaska. Researchers believe the loss of sea ice is to blame, according to a report issued earlier this month.

Large numbers of Pacific walruses were not known to haul out on the Alaska shores of the Chukchi until 2007, when the pack ice moved far to the north and beyond the waters of the continental shelf. Coming to land is unusual behavior. In the past the walruses have stayed with the ice, migrating with it between the Chukchi and Bering seas from season to season. Walruses move in dense herds, and limiting they’re space can put young animals at risk, said USGS research ecologist Chad Jay.

Although it’s unknown what exactly killed the walruses in September, the leading theory is they were trampled after the herd became spooked and retreated into the water. Large-scale trampling events have been previously documented in Russia, but never before in this far-flung corner of Alaska. If a herd is spooked while resting on ice, there are more escape options. Walruses are more spread out and can head to the water in multiple directions if the herd must move quickly, Jay said. Also, on the ice they are less likely to have startling encounters with planes, bears or people.

As new regulations take shape to operate in the Arctic, Shell will work to establish new “marine mammal avoidance measures” as needed, Smith said. But the company is also looking to thwart the emergence of unnecessarily burdensome, or ineffective, policies and regulations.

It’s unlikely Shell’s investors won’t see a return on their billions of dollars spent thus far on Arctic projects for at least another 10 years, Smith said. Still, further delays could come at a hefty price.

“At a time when resources and capital can be moved across the globe with a mouse click, it’s fair to say regulatory delays like we are experiencing in Alaska are seriously testing our definition of ‘patient capital,'” he said.

Contact Jill Burke at jill_alaskadispatch.com

SOURCE ARTICLE

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

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