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Alaska seeks to overturn delay in Arctic drilling

REUTERS

Thu Sep 9, 2010 8:57pm EDT

* US Interior Department says no formal moratorium exists

* Says go-slow Arctic policy separate from deepwater ban

* Royal Dutch Shell has been denied drilling permits

By Yereth Rosen

ANCHORAGE, Alaska, Sept 9 (Reuters) – The state of Alaska on Thursday filed a petition in federal court to overturn the Obama administration’s moratorium on drilling in federal waters of the Arctic, even though Interior Department officials insist that no such formal moratorium exists.

The state’s legal petition, filed in U.S. District Court in Anchorage, says the Interior Department “arbitrarily and capriciously imposed” a moratorium on drilling in federal waters off Alaska after the Deepwater Horizon disaster “without considering and weighing the potential effects on Alaska, including economic harm to the State of Alaska and Alaska residents.”

The unusual move is backed by Alaska Governor Sean Parnell, who railed against the economic damage a moratorium would cause in the state.

“Development of Alaska’s (Outer Continental Shelf) resources is of critical importance to Alaska’s future and the economic and security interests of the United States,” Parnell said in a statement. “We are taking this action to ensure that the federal government abides by applicable federal law, including its legal responsibility to make the OCS available for expeditious and orderly development.”

But Interior Department officials said the drilling moratorium imposed on deepwater Gulf of Mexico operations is separate from a policy decision to take a go-slow approach on new Arctic offshore drilling.

“There is no moratorium in Alaska and therefore nothing to sue on. The moratorium is on deepwater drilling and there is no deepwater drilling in Alaska,” Interior Department spokeswoman Kendra Barkoff said in an email sent Thursday.

“We are taking a cautious approach to offshore oil and gas development as we strengthen safety and oversight of offshore oil and gas operations. This includes the Arctic, which presents unique environmental challenges.”

Royal Dutch Shell (RDSa.L) had planned to drill up to three wells in the Chukchi Sea and up to two wells in the Beaufort Sea during this year’s summer and fall open-water period. Those prospects are in waters no deeper than 150 feet (45 meters), considered shallow.

But in response to the blowout and massive spill at BP’s (BP.L) Deepwater Horizon well, the Interior Department announced that it would not issue drilling permits to Shell until more study was completed. Shell has said it hopes to drill the Chukchi and Beaufort wells next year.

There has been confusion about whether a moratorium on Alaska drilling exists.

Secretary of the Interior Ken Salazar said at an Anchorage news conference last week that the existing moratorium on deepwater Gulf drilling does affect Alaska, but later in the news conference he and other Interior officials clarified the statement to make a distinction between the formal Gulf of Mexico moratorium and the related decision to delay any issuance of drilling permits for federal waters in the Arctic.

Aside from any Interior Department policies, a court ruling has blocked any Chukchi Sea drilling in the near future.

U.S. District Court Judge Ralph Beistline ruled on July 21 that a 2008 Chukchi lease sale held by the Minerals Management Service was conducted without proper environmental review, and that no exploration activities on the leases issued could be permitted until deficiencies are remedied.

(Editing by Bill Rigby; Editing by Gary Hill)

REUTERS SOURCE ARTICLE

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