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Wednesday, July 13, 2011

Shell Executive Is Optimistic about Alaska Drilling

- Shell Executive Is Optimistic about Alaska Drilling

Wednesday, July 13, 2011
Houston Chronicle
by Jennifer A. Dlouhy

The Obama administration moved Tuesday to synchronize work by more than a dozen agencies with roles in vetting drilling in Alaska, as a top Shell executive said he is optimistic the company will be able to drill there next summer.

The administration's move seeks to quell complaints by oil companies and their advocates in Congress who say the permitting process is broken and has stalled promising exploration projects in Alaska and nearby waters.

The administration launched a working group, headed by Deputy Interior Secretary David Hayes, that will bring together seven Cabinet-level departments and other agencies. Hayes said the panel would "facilitate safe and responsible development in Alaska."

"We are committed to proceed in a balanced, science-driven way that addresses the needs of industry, of the environment and of local communities," he said during a forum on Arctic drilling sponsored Tuesday by the Center for Strategic and International Studies.

The new government working group won't replace the host of state and federal permits that oil companies must secure before they begin drilling in the region. And Hayes rejected the notion that the move constituted "streamlining" of environmental safeguards or other requirements that govern oil and gas exploration in Alaska.

But, at the same time, he said, "this is a one-stop shop for coordination of permitting. This group will ensure that there is good coordination in that regard."

'A positive step'

Sen. Lisa Murkowski, R-Alaska, called the administration's move "a positive step."

"A broken federal permitting process has for years held up responsible development of our offshore oil and natural gas resources in Alaska," she said. Murkowski added that she hopes the panel is "successful at closing what has been an endless loop of approvals, appeals and delays."

Sen. Mark Begich, D-Alaska, said the group could go a long way to "untying the procedural knots that have stalled development" in offshore Alaska and the National Petroleum Reserve.

One of those delayed projects is Shell Oil Co.'s plan to drill exploratory wells in the Beaufort and Chukchi seas. The company had hoped to launch work on its first Beaufort well after ice cleared this summer but scrapped the plans in February, after a federal Environmental Appeals Board rejected two essential air permits issued by the Environmental Protection Agency.

The EPA just issued new draft air quality permits for Shell's proposed Arctic drilling, and EPA officials say they are confident that the documents will withstand the legal challenges that derailed last year's permits.

Shell Alaska Vice President Pete Slaiby said he too is optimistic. He predicted the company will have working air quality permits by mid-October and then will prevail in any legal challenges before the appeals board.

Shell is asking federal regulators for permission to drill up to five wells in both the Beaufort and Chukchi seas during next year's three-month drilling season, with those projects sharing some of the same assets and infrastructure. If federal regulators don't approve drilling in both seas, the company might not pursue either project next year, Slaiby said, because it wants the efficiencies of doing both at once.

Although the Bureau of Ocean Energy Management, Regulation and Enforcement is now reviewing Shell's proposed Beaufort exploration plan, its separate drilling blueprint for the Chukchi Sea is on hold, pending the outcome of a court-mandated review of the government's sale of drilling leases where that work is planned.

The Interior Department is facing a court-ordered Oct. 3 deadline to decide whether to affirm that lease sale, after updating environmental assessments. The government cannot approve drilling on those leases unless the sale is affirmed.

Warning from activists

Environmentalists have warned that it could be difficult to clean up any oil spilled in slushy Arctic waters. Cold, icy conditions also mean it could take far longer than in the much warmer Gulf for spilled oil to naturally break up in the water. And they insist the risks are too great for animals in the region as well as the native communities that live off those resources.

In response, Shell has bolstered its Arctic drilling proposals with new emergency equipment and plans for responding to a blowout. For instance, the company would use two drillships in the region, ensuring one would be on hand to drill a relief well if necessary. Shell also has committed to developing a containment system that could be deployed to trap and siphon off gushing crude.

Copyright (c) 2011, Houston Chronicle

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