Shell Oil Company was all set to begin exploring the petroleum-rich arctic waters off the northwest coast of Alaska. But then the major spill in the Gulf of Mexico happened.

In response, President Obama issued a 30-day moritorium on new drilling permits and environmental groups sued to permanently block the plans. The moritorium is set to expire at the end of May.

The administration had already approved Shell’s plan to drill five exploratory wells this July in the Chukchi and Beaufort seas. And the Justice Department defended that decision to a three-judge panel of the Ninth Circuit Court of Appeals in Portland. Late last week the panel denied a request from Alaska Natives and environmental groups for an injunction to halt the drilling.

Residents of Point Hope, Alaska say a major spill would destroy their way of life. For thousands of years the eskimos have been living off what they can catch in the Arctic ocean. Bowhead whales, seals and fish comprise 75% of their diet.

Shell officials say while the ice and harsh winter conditions do present challenges in the Arctic, drilling can be done safely. In fact, Pete Slaiby, Shell Alaska V.P., tells Fox News the drilling depth in the Arctic is far more manageable than exploration in the Gulf of Mexico. The B.P. blowout happened at 5,000 feet, whereas the deepest exploratory well in either the Chukchi or Beaufort seas would be 150 feet.

Also, Slaiby says Shell has promised to have an oil spill response vessel in place for the duration of the drilling. Given the disaster in the Gulf, environmentalists are unswayed. The Center for Biological Diversity has given the Interior Department notice it plans to sue arguing the need for more research into the impacts of a major spill in the Arctic.

What’s at stake? According to the Minerals Management Service, there are 27 billion barrels of recoverable oil in the U.S. portion of the Arctic ocean. That’s 11 billion barrels more than has been produced on Alaska’s North Slope over the last 3 decades.

Shell has already spent over $3.5 billion on leases, equipment and research for its Arctic exploration. Now it must wait to see what the courts and Obama Administration will do next.

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