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Feds give Shell green light to launch Arctic drilling

Posted August 30, 2012 by Jennifer A. Dlouhy

The Obama administration on Thursday agreed to immediately allow Shell to launch drilling in Arctic waters, even though a critical oil spill containment barge is still a two-week trek away.

Administration officials stressed that the company would only be allowed to begin initial site work and drilling, without penetrating underground oil reservoirs until that emergency equipment has won Coast Guard certification and is on site.

But environmentalists accused the White House of bending over backwards to satisfy Shell and oil drilling advocates in an election year.

“Shell will not be authorized to drill into areas that may contain oil unless and until the required spill containment system is fully certified, inspected and located in the Arctic,” said James Watson, director of the Interior Department’s Bureau of Safety and Environmental Enforcement. But the company will be able “to move forward with limited activities well short of oil-bearing zones that can be done safely now prior to the certification and arrival of the containment system.”

The move is aimed at allowing Shell Oil Co. to salvage what’s left of an already brief season for drilling in the remote Beaufort and Chukchi seas before ice encroaches this fall.

The company has spent nearly $5 billion and seven years preparing to drill in the region but it has suffered a series of setbacks in recent weeks _ including long delays in the refurbishment of the 36-year-old Arctic Challenger spill containment barge. That ship is still docked in a Bellingham, Wash., shipyard, where it has been undergoing retrofits.

Under permits just approved by the safety bureau, Shell is authorized to begin initial preparation work at its Chukchi Sea drilling site, including excavating a 20-foot by 40-foot mud line cellar, designed to hold a critical emergency device known as a blowout preventer just below the sea floor.

The company also will be allowed to begin so-called “top-hole drilling,” by setting the first two strings of casing into shallow non-oil bearing zones.

When the Interior Department approved Shell’s broad drilling blueprints for the Beaufort and Chukchi seas, it said permits for individual wells were contingent on the company satisfying the terms of its oil spill response plan, including staging a system for capping and containing a runaway underwater well in between the sites.

And in a conference call with reporters on Aug. 13, Interior Secretary Ken Salazar said he was committed to stiff oversight of Shell.

“I will hold their feet to the fire in terms of making sure we are doing everything we can to abide by the regulation we have set and to make sure that the environment and the Arctic seas are protected by their activities,” Salazar said at the time.

Salazar insisted today that the administration is not backing down from that approach.

“In terms of our approach, it has not changed at all,” Salazar told reporters on a conference call. “We are holding Shell’s’s feet to the fire. Unless the Arctic Challenger gets certified and has the containment capacity that is required, there will be no penetration in the oil-bearing zones in the Arctic, period, end of story.”

“The Challenger itself will have to be on site before they penetrate oil-bearing zones,” Salazar added.

Deputy Interior Secretary David Hayes noted that while the Challenger needs to be on the scene during drilling into areas that could hold oil, “it is equally clear that the preparatory work prior to going into an oil-bearing zone is in a different category.”

“The Challenger isn’t needed because there is not the opportunity for an oil spill,” Hayes said.

Before the Arctic Challenger could begin a two-week (or longer) journey to the Chukchi Sea, it has to be certified by the Coast Guard and successfully complete a drill for the safety bureau. Coast Guard certification still could be roughly a week away.

Environmental activists who oppose Arctic drilling have been pressing the Obama administration to deny Shell’s request and have suggested that regulators appear to be bending over backward to accommodate the company.

Emilie Surrusco, with the Alaska Wilderness League, noted earlier this week that “Shell’s continued manipulation of the process and the rules begs the overall question who is really in charge in the Arctic.”

Mike LeVine, a senior counsel with the conservation group Oceana, accused the government of continuing “to bend over backward to accommodate a company that is still not ready to drill.”

“Companies like Shell must be held to the highest standards,” LeVine said. “Bending the rules because Shell is not ready is not consistent with that promise.”

Shell still would need to get government-approved amendments to its permits to continue drilling its Arctic wells and go beyond the initial work at those sites. The company must halt drilling in hydrocarbon-bearing zones by Sept. 24 in the Chukchi Sea and Oct. 31 in the Beaufort Sea.

Shell officials have said just two out of 10 planned wells have a chance of being completed this year. And Shell Alaska Vice President Pete Slaiby has conceded that even those two might be a challenge under the abbreviated schedule.


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