US: Temporary Halt to Offshore Drilling Means Arctic, Too

Washington – Saying there are new safety concerns raised by last month’s explosion of an oil drilling rig in the Gulf of Mexico, the Interior Department has told Shell Oil its exploratory drilling plans in the Arctic Ocean also fall under a temporary halt to all pending U.S. offshore drilling proposals that was imposed after the Deepwater Horizon exploded and sank last month.

“The recent and ongoing tragedy of the Deepwater Horizon incident in the Gulf of Mexico highlights the importance of taking every step necessary to ensure the safety of all offshore drilling operations,” Elizabeth Birnbaum, the director of the Minerals Management Service, wrote Thursday to Marvin Odum, the head of Shell’s North American division.

MMS is looking specifically for additional safety procedures the company is proposing to undertake in light of the Deepwater Horizon accident, and gave Shell until May 18 to file the additional information.

Interior Secretary Ken Salazar also announced late Thursday that the company’s offshore plans for this summer will fall under the temporary halt to all offshore drilling proposals pending in the United States. There will be no new offshore drilling activity until the Interior Department completes the safety review process requested by President Barack Obama, Salazar announced Thursday. The department is required to deliver the report to the president by May 28, 2010.

Salazar also announced specifically that the MMS will not make a final decision on Shell’s permits for exploratory wells until the Interior Department’s report to Obama has been submitted and evaluated.

Shell, hoping to put distance between the oil gushing from a BP rig into the Gulf of Mexico and its own pending Arctic project, sent a top executive and engineer to Capitol Hill this week to convince decision-makers that the company still be allowed to drill exploratory wells off Alaska’s northern coast.

The company’s lobbying came as the Obama administration canceled planned offshore leases in Virginia and environmental groups went to court to delay the Dutch oil giant’s plans to drill exploratory wells this summer in the Beaufort and Chukchi Seas.

Their aim, said Shell’s Alaska spokesman, Curtis Smith, is to reassure regulators and stakeholders that the company “can operate safely and responsibility here in Alaska,” especially in light of the shifting political winds after the April 20 explosion in the Gulf of Mexico that left 11 dead and 210,000 gallons of oil leaking each day from the downed BP rig.

As they’ve made the rounds on Capitol Hill, the company officials have been emphasizing the technical differences in drilling in 200 or less feet of water and the 5,000-foot-deep gulf operations.

“We think it’s an important contrast to highlight the difference in drilling regimes in Alaska and the deepwater Gulf of Mexico,” Smith said. “Shell is a pioneer also in the deepwater Gulf of Mexico, so I don’t mean to disparage that as an unsafe drilling regime at all, but they’re just different.”

The company’s oil response experts joined the vice president of the Alaska operation, Pete Slaiby, and one of their top engineers, Charlie Williams. The Shell team met with staffers who work on the Senate Energy and Natural Resources Committee for Sen. Lisa Murkowski, R-Alaska, Sen. Mark Begich, D-Alaska, and Rep. Don Young, R-Alaska.

Smith could not confirm whether anyone with Shell met with officials within the White House or the Interior Department; however, they have met with officials with the Minerals Management Service’s Alaska office, he said. The Interior Department also has not said whether company officials met with anyone at the federal agency in Washington.

The events in the Gulf of Mexico have given them reason to “double- and triple-check what we already believe is a very robust drilling plan to see if we can make it better,” Smith said.

Shell in 2008 spent $2.1 billion on the Arctic leases in the Beaufort and Chukchi seas. The Minerals Management Service estimates that the two Arctic seas hold up to 19 billion barrels of oil and up to 74 trillion cubic feet of natural gas, making their resource potential comparable to the known oil and gas from the North Slope’s onshore fields.

In early April, the White House announced it supports development of some oil and gas leases in Arctic waters off Alaska’s coast but won’t allow drilling in federal waters near Bristol Bay. Following the accident in the gulf, the Obama administration announced it would suspend any additional offshore oil lease sales while it investigates what new technology is needed to prevent another such deadly blowout. The administration also on Thursday halted a planned lease sale in Atlantic waters off the coast of Virginia.

It would be at least five years before exploratory drilling got under way, so there was no political loss in the decision to halt mid-Atlantic leases, said Kieran Suckling, executive director of the Center for Biological Diversity, an environmental group.

“He’s basically stopped something that hadn’t gotten going yet,” Suckling said, adding that canceling all new offshore drilling, including that in the Arctic, would show “real leadership.”

“If he wanted to cancel that, he’d be making a real decision, affecting a real corporation, and actually protecting the environment,” Suckling said.

So far, though, the administration hasn’t indicated that Shell would be prohibited from moving forward on its exploratory wells.

The company is awaiting an appeal of the Environmental Protection Agency’s decision to issue air permits for its exploratory vessels and rigs. It’s also awaiting the outcome of a last-minute court challenge heard Thursday in federal court in Portland, Ore.

Right now, the company is planning to drill this summer, Smith said.

“We’re intending to mobilize and move forward,” he said. “We’re going to move forward until someone tells us that we should not.”