Offshore oil: Shell Alaska hopes for answers this year

Unless the U.S. Department of the Interior decides soon on the future of offshore oil exploration in the Arctic, another season could be lost in the Chukchi Sea off Alaska's northwest coast, a Shell spokesman says. A subsidiary of the oil giant Royal Dutch Shell, Shell Alaska says it is needs to know before the end of the year whether the nation is really interested in the search for major new deposits of oil and gas beneath northern seas.

"What we're asking for is just clarity,'' said Curtis Smith, a Shell spokesman in Alaska, Thursday. "We're not going to wait until spring to make a decision again. We can't afford that.''

Smith said Shell has set an end-of-the-year deadline for its next decision on long-awaited drilling in the Chukchi and Beaufort seas.

Michael Bromwich, the new director of the Bureau of Ocean Energy Management, Regulation and Enforcement, wants clarity, too, and has scheduled a series of public meetings around the country to hear from industry, academics, environmental groups, state and local officials and the public on what additional measures may be needed before deepwater drilling will be permitted again.

The hearings are the result of the federal government suspending deepwater drilling following the Gulf of Mexico spill. The agency plans to address other issues related to oil exploration and production, including oil spill response and blowout prevention.

The bureau plans to hold one meeting in Anchorage next month. A specific date and place have not been finalized, an agency spokesman said.

Oil leases and delays

The company's holding in the Beaufort are north and east of the major oil fields at Prudhoe Bay. Shell's big holdings are to the west of there, however, in the undeveloped Chukchi Sea between Alaska and Russia.

Shell bought $2.7 billion in leases spread across 2.76 million acres of Chukchi seabed from the administration of President George W. Bush in February 2008. Three drilling seasons later, it has yet to sink a bit in the ground.

Environmentalists and North Slope residents fearful of potential oil spills and the pollution they could cause sued to block drilling before the ink on the leases was dry more than two years ago. And a federal judge in Washington, D.C., in early 2009 ruled that environmental studies for the project completed by the U.S. Minerals Management Service were inadequate. Shell lost both the 2008 and 2009 drilling seasons to litigation.

Interior got the company back on track toward drilling in late 2009, deciding that Shell could start work in the Arctic while the Obama administration reviewed the Bush administration's five-year plan for oil and gas exploration the courts had found suspect.

Gulf oil disaster adds delays

Shell was organizing equipment to move north to begin Arctic drilling this year when BP's Deepwater Horizon oil rig exploded, burned and sank in April, killing 11 rig workers and unleashing an undersea gusher of gas and oil that finally capped only days ago.

As the oil gushed, the White House ordered a stop to all offshore drilling along the nation's coast. The timing of the May 27 moratorium sank Shell's plan for a summer season of drilling in the Arctic. The Obama administration later allowed some offshore activities to proceed, but left hanging the fate of offshore drilling in the Arctic.

It is still hanging.

Environmentalists remain opposed, and they won another court victory this week when a U.S. federal court judge in Alaska ruled the MMS had allowed drilling plans to move forward without assessing the environmental impacts of potential natural gas developments. The federal agency's environmental review only addressed oil drilling.

U.S. District Court Judge Ralph Beistline said the MMS -- which has been renamed the Bureau of Ocean Energy Management, Regulation and Enforcement -- needs to do a better evaluation of gas development before drilling can begin.

"We're hopeful that they're going to complete that work,'' Smith said, "(but) MMS still has work to do on the five-year plan."