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EPA issues key permits to Shell for Alaska drilling

By Yereth Rosen

ANCHORAGE, Alaska, Sept 19 | Mon Sep 19, 2011 8:21pm EDT

(Reuters) – Royal Dutch Shell (RDSa.L) has won two critical permits it needs to drill in Arctic waters off Alaska in the next two years, federal officials said on Monday.

The U.S. Environmental Protection Agency said it issued Shell final air-quality permits the company needs to operate a huge drill ship and associated vessels in the Chukchi and Beaufort Seas.

Loss of similar permits in a battle with environmentalists and Alaska native groups last winter forced Shell to abandon its plan to drill this year.

A Shell representative said approval of the new permits puts the company on its way to drilling in the offshore Arctic. Shell plans to drill two wells a year in the Beaufort in 2012 and 2013 and up to three wells a year in the Chukchi during the same period.

“The delivery of final permits for our exploration program is another in a series of recent positive developments that adds to our confidence that we will be drilling our offshore Alaska leases by July of next year,” said Curtis Smith, Shell’s spokesman in Alaska.

“We canceled our 2011 drilling program for lack of a usable air permit, so against that background, this is a major milestone,” he said.

The new permits include tightened standards for particulates and nitrogen oxides. Still, they allows Shell to emit more than 250 tons of pollutants a year. Shell plans to be operating in the Chukchi and Beaufort for up to 120 days a year, during the open-water seasons.

Environmental and native groups are likely to challenge the new permits to the EPA’s Environmental Appeals Board, the panel that struck down the earlier permits, said one environmental attorney.

“Given that it doesn’t seem like they’ve substantially changed much, all signs are that we will appeal,” said Brendan Cummings, senior staff attorney for the Center for Biological Diversity, one of the groups that challenged the earlier permits.

“The fact that these permits were struck down by the EAB last year forced them so do some things that will reduce pollution. But not really as much as they could and should and we believe that the law requires them to do,” he said.

Smith said Shell expects an appeal. “We think the permit is technically and scientifically sound and will withstand that appeal,” he said.

Since 2005, Shell has spent over $3.5 billion in its Alaska exploration program, mostly for leases in the lightly explored Chukchi, off northwestern Alaska, and the Beaufort, off the state’s northern coast. But the company has yet to drill a single well on those properties because of adverse court rulings and offshore policy changes prompted by last year’s Deepwater Horizon disaster.

(Editing by Peter Henderson and Steve Orlofsky)

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