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Arctic approval ‘probable’ for Shell

By Jennifer A. Dlouhy Published 09:55 p.m., Tuesday, June 26, 2012

United States secretary of the Interior, Ken Salazar, speaks during a conference in Trondheim, Norway, Tuesday, June 26, 2012. The conference is centered on the management and use of natural resources in arctic areas. (AP Photo/Ned Alley / NTB scanpix) NORWAY OUT Photo: Alley, Ned / NTB scanpix

WASHINGTON – A top Obama administration official predicted Tuesday that Shell will win government permits to drill for oil in Arctic waters this summer, while the government readies a plan to allow further energy exploration in the region four years from now.

“Having seen the conditions that Shell has already met, it is probable that they are going to get these permits,” Interior Secretary Ken Salazar said.

Salazar stressed that federal regulators are still scrutinizing Shell Oil Co.‘s applications to drill up to five wells in the Beaufort and Chukchi seas, after a test Monday of one of its emergency response systems and in advance of other drills.

Salazar also said the Interior Department will conduct additional scientific studies in advance of selling more drilling leases in the Beaufort and Chukchi seas in 2016 and 2017.

But his comments to reporters, delivered by conference call from Norway where he is attending a ministerial forum on Arctic offshore drilling, made clear the administration is committed to energy development in the region, despite stiff environmental opposition.

Niel Lawrence, a senior attorney with the Natural Resources Defense Council, said the administration’s statements emphasized its commitment not to proceed until it can do so without risk.

“But it’s pretty hard to get that to line up with either the granting of the final permits this year or what seems like a pretty firm commitment to go ahead with Chukchi and Beaufort lease sales,” he said.

Salazar’s declaration also was a major show of confidence in Shell’s Arctic drilling program, seven years after the company began its quest to launch a fresh search for oil in the region. Shell’s proposed drilling is slated for areas it leased in 2005, 2007 and 2008.

First line of defense

In the waters of Puget Sound, with federal inspectors present, Shell on Monday tested its first line of defense against runaway Arctic wells: a capping stack designed to choke off flowing hydrocarbons at a damaged subsea well.

Shell spokeswoman Kelly op de Weegh said the company successfully sent its capping stack to depths similar to where it would be needed if one of the planned Arctic wells were damaged.

Regulators plan a separate test of Shell’s containment system for siphoning off crude oil and gas so it can be collected or flared at the sea surface.

Environmentalists who oppose Shell’s planned drilling say there is no guarantee the capping system would work correctly in remote and choppy Arctic waters, even if it cleared a deployment drill in the Pacific Northwest.

But Salazar insisted that “there’s not going to be an oil spill” from Shell’s planned Arctic drilling because the company’s plans are being scrutinized so heavily.

The administration’s plan for new oil exploration in the region is embedded in a final schedule of offshore lease sales over the next five years that is set to be released soon.

The final 2012-2017 outer continental shelf plan is nearly identical to a leasing blueprint the Interior Department unveiled last November, though it includes a one-year delay of Beaufort and Chukchi sea lease sales originally proposed for 2015 and 2016. The extra year would allow additional scientific studies in the region, Deputy Interior Secretary David Hayes said.

Under the plan, the government would hold a dozen auctions of leases in the Gulf of Mexico.

‘Targeted leasing’

Tommy Beaudreau, director of the Bureau of Ocean Energy Management, which oversees auctions in federal waters, promised a “targeted leasing” approach to the Arctic that focuses new energy exploration on areas with known resources while avoiding regions that are sensitive.

For instance, the final five-year leasing plan – like the initial proposal – will keep an area north of Barrow, Alaska, off-limits for development because of the subsistence whaling in the region. The administration also will preserve a 25-mile buffer zone along Alaska’s Chukchi Sea coastline and wall off the Hanna Shoal area that is home to a high concentration of marine life.

No one pleased?

The final leasing plan appeared unlikely to please oil industry leaders or environmentalists who had lobbied the administration to make changes. Industry advocates pressed the White House to put more unexplored areas on the table for leasing; environmentalists wanted the administration to cancel the Arctic sales altogether.

Lawrence, the Natural Resources Defense Council lawyer, noted that even if they are walled off to development, the Chukchi Sea shoreline and Hanna Shoal area could be jeopardized by a nearby spill.

“There seems to be a little myopia about what the risks are,” Lawrence said, citing the 2010 Gulf of Mexico oil spill. “Just take a look at a map of what happened with Deepwater Horizon. Limiting the drill area isn’t limiting the spill area.”

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