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Gulf spill could have Alaska repercussions

BACKLASH: State is next in line for drilling in federal waters.

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Published: May 1st, 2010 11:45 PM
Last Modified: May 1st, 2010 11:46 PM

The oil gushing from a Gulf of Mexico oil well has the potential to touch Alaska in many ways.

Alaska is next in line, nationally, for offshore oil development in federal waters — Shell Oil hopes to drill exploration wells in the Beaufort and Chukchi seas this summer, opening a controversial new frontier for the state’s oil industry.

Investors’ jitters over future offshore oil production could boost Alaska oil prices — it happened Thursday, when the price for Alaska crude jumped by $2.70 to $83.97.

National outrage could dim the prospects of an offshore oil boom in Alaska’s Arctic waters, which federal scientists say could hold some of the biggest oil and gas deposits in the country.

Or, the Gulf disaster could have the less-dramatic effect of prompting new state or federal rules for preventing disasters at oil rigs and offshore wells, including the ones in Alaska.

State oil and gas regulators have no say over oil and gas projects in federal waters, but they said Friday they are closely watching the aftermath of the Deepwater Horizon rig explosion and sinking to find out what went wrong.

That’s because they regulate offshore development in Cook Inlet and in state waters off the North Slope, home to a growing number of oil fields. And also because they are worried that federal officials may overreact, said Kevin Banks, state Oil and Gas Division director.

“We are concerned because of the potential for a real backlash and people seeking to shut (offshore drilling) down,” he said.

Offshore oil development isn’t the only part of Alaska’s oil industry that could be affected by the Gulf spill.

Major industry catastrophes, such as the 1989 Exxon Valdez spill, can lead to costly, far-reaching changes that have nothing to do with pumping oil from federal waters. Already some environmental groups said they plan to use the Gulf spill in their campaign to permanently close off oil-company access to the promising coastal plain of the Arctic National Wildlife Refuge.


Banks said Alaska’s offshore drilling projects face a lower risk of the dangerous high-pressure build-ups that may have been a big factor in the Gulf rig disaster. That’s because Alaska’s offshore prospects in the Arctic — so far, at least — are located in 200 or less feet of water, unlike the Deepwater Horizon oil rig that caught fire and sank in 5,000 feet of water in the Gulf of Mexico.

The Alaska Oil and Gas Conservation Commission regulates oil-well safety, and some of its top officials said Friday they also hope to learn soon about the cause of the Deepwater explosion. The commission could consider new regulations, depending on what lessons are learned from the disaster. For example, the commission does not require drillers to have a second rig available to drill a relief well if something bad happens to the first rig. A couple of the commissioners said Friday they’d look into that matter.

Shell Oil hopes to drill in both the Beaufort and Chukchi seas this summer if it can get the federal permits it still needs and withstand legal challenges from environmental groups and several North Slope villages.

But Shell doesn’t have all of its authorizations yet, and federal officials have the power to cancel its project.

For now, Shell hasn’t been told to stop work, said Curtis Smith, the company’s spokesman in Alaska.

He said his company has been meeting with state and federal regulators and Alaska elected officials in the aftermath of the Gulf spill to reassure them about their plans in the Arctic.

He said the wells Shell would drill in the Arctic inherently have a higher safety margin than the one in the Gulf.

Also, he said, the company has a second drill ship stationed in Canada’s Arctic waters that would drill a relief well to stop oil from flowing if something happened to Shell’s exploration rig.


Some on the North Slope said Friday that they feel like the Gulf spill has justified their opposition to Shell’s drilling.

“I’m sad in my heart that this occurred, but I hope it is an eye-opener for the Native corporations or the oil giants like Shell and BP,” said Caroline Cannon, president of the Native village of Point Hope.

She said she has been watching the Gulf disaster unfold on TV, with oil-spill prevention measures unable to keep oil out of coastal areas. “This is the message that we have been saying from day one. That we do not have the technology to clean up an oil spill,” she said.

David Harding, a spokesman for the North Slope Borough said Friday that borough officials remain reluctant to make any conclusions until they find out more about what caused the Gulf spill.

On Friday, the Obama administration announced it is suspending any additional offshore oil lease sales while it investigates what new technology might be needed to prevent another accident. That probably won’t affect Alaska much because future lease sales in the Arctic were already on hold pending additional studies.

Robert Dillon, the energy spokesman for U.S. Sen. Lisa Murkowski, R-Alaska, said that for now it looks like the administration is allowing already-approved exploration plans — such as Shell’s — to proceed.

He said Murkowski remains confident in Shell’s exploration plan but wants to find out what happened wrong in the Gulf.


The U.S. Minerals Management Service in Washington, D.C., did not respond Friday to queries about how the Obama announcement will impact Shell’s activities.

The MMS and the Coast Guard sent a safety alert to onshore and offshore drilling operators around the country on Friday asking for increased vigilance. They recommended that the operators run a series of safety checks on their well equipment and review their emergency equipment and procedures, ensuring that workers are properly trained on how to react to a problem.

The agencies said in the safety alert that their findings on what went wrong with the Deepwater Horizon rig will be published in a report that will be made public “as soon as possible.”


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