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Shell offshore oil drill plan in Alaska challenged


By Yereth Rosen

ANCHORAGE, Alaska, Jan 20 (Reuters) – Environmental and Alaska Native groups have filed a legal challenge seeking to overturn U.S. approval of Royal Dutch Shell Plc’s (RDSa.L) plans to drill up to three wells this year off the shore of Alaska, representatives said on Wednesday.

Late on Tuesday, the coalition of groups filed its challenge to drilling in the remote Chukchi Sea. The petition in the 9th Circuit Court of Appeals seeks to void the U.S. Minerals Management Service’s Dec. 7 approval of Shell’s plan for wells about 60 miles off Alaska’s northwestern coast.

The challenge is similar to one the same groups filed last month seeking to overturn MMS approval of Shell’s plan to drill a pair of wells in federal waters of the Beaufort Sea.

In their Chukchi challenge, the groups say the MMS failed to properly consider the hazards posed by drilling in the remote sea area. The sector is believed to hold high oil and gas potential but has been explored only lightly.

The petitioners said Chukchi drilling poses risks of oil spills and other pollution; noise that would disturb marine mammals such as walruses; and other hazards in a sensitive region already under stress because of climate change.

“It is a major industrial undertaking in a big, poorly understood and changing ocean,” said Michael LeVine, senior counsel for Oceana, one of the environmental groups participating in the challenge.

The combination of Beaufort and Chukchi drill plans adds to the risks, he said.

A Shell spokesman defended the MMS approval decision.

“It’s our belief the MMS was thorough in its technical and environmental evaluation of our 2010 Exploration Plan and that Shell has demonstrated its ability to operate in the Arctic in an environmentally responsible manner,” Shell spokesman Curtis Smith said in a statement. “A tremendous amount of work went into writing and evaluating this permit and we fully expect the MMS to be successful in defending its approval.”

Smith said “Shell has already completed four years of successful seismic and shallow hazard work in the Chukchi Sea – an area that could be home to some of the most prolific, undiscovered hydrocarbon basins in the U.S.”

The Chukchi, between northwest Alaska and northeastern Siberia, is believed to hold 15 billion barrels of recoverable oil and 76 trillion cubic feet of natural gas, according to MMS estimates. But only five exploration wells have ever been drilled there.

Shell’s Beaufort plan proposes two wells this year at a prospect located about 16 miles off Alaska’s northern coast.

In both the Beaufort and the Chukchi, Shell plans to drill during summer and fall open-water season in the normally ice-covered region, using the same drill ship, ice breakers and support vessels for both ventures.

Shell spent about $84 million in 2005 and 2007 acquiring leases in the Beaufort, and in 2008 put up $2.1 billion to acquire exploration rights in the Chukchi.

That Chukchi lease sale drew $2.66 billion in high bids from several oil companies, a record dollar amount for any Alaska oil and gas auction.

ConocoPhillips (COP.N), which hopes to launch a drilling program in the Chukchi in 2012, spent over $500,000 acquiring leases there. Other oil companies that acquired leases in the 2008 sale are Repsol, Statoil and Eni. (Reporting by Yereth Rosen; Editing by David Gregorio)

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