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Before Gulf spill, Shell touted Arctic drilling safety

Posted: Thursday, May 20, 2010

Shell Oil executives assured Alaska legislators earlier this year that they could drill safely offshore in the state's pristine Arctic waters. A representative for the oil giant also blasted federal environmental regulators for what he described as an overly cumbersome permitting process.

"We believe we can develop this responsibly," Pete Slaiby, Shell's Alaska general manager told state lawmakers in April.

The federal Minerals Management Services is now taking a new look Shell's Arctic exploration program following the BP's devastating oil spill in the Gulf of Mexico.

A Juneau-based environmental group that's opposed offshore drilling in the Arctic remains skeptical, however.

Shell hopes to drill offshore in Alaska's Chukchi Sea this summer as part of an oil and gas exploration effort. The company has already invested $3.5 billion in the project.

Alaska offshore holds big promise

Shell lobbyist Cam Toohey called Alaska's offshore "one of the best opportunities in the Western Hemisphere" for finding big quantities of oil.

While the company has had difficulty obtaining environmental permits, including a delay that resulted in the expensive cancellation of last summer's planned exploratory drilling, Toohey said the company could drill safely in Arctic waters.

Speaking before the massive spill created when BP's Deepwater Horizon rig burned and sank in the Gulf of Mexico, Shell executives assured legislators that drilling could be done safely, but said the company was also ready with a strong spill response effort as well.

The drill ship will be accompanied by a dedicated spill response vessel, he said.

Before the vessels head through the Bering Strait to the Arctic waters where Shell wants to drill, workers will spend a month in Valdez training for spill response, Slaiby said.

"Any spill response program is only as good as the degree you train it up," he said.

Prevention vs. cleanup

Stopping spills from happening in the first place is the key to a successful drilling operation, the company has said.

"The best thing you can do is spend all your time working on prevention, that's really the key," Toohey said.

He said Shell would be using technology such as hydraulic rams to stop blowouts on the ocean floor.

"There's a tremendous amount of technology in the downhole," Toohey said. "You've got blowout preventers, rams that cut off in the immediate instance (of a problem) to keep the flows from ever reaching the surface."

That clearly didn't work in the Gulf of Mexico, and drilling shouldn't be allowed in the Chukchi until it is clear why, said Mike Levine, the Juneau-based Pacific Legal Counsel for the environmental group Oceana.

"(Shell's) plans ... were approved using the same standard and same regulations that caused the spill in the Gulf," he said. "Just like in the Gulf, Shell told the government that the chance of a spill was so remote that it did not even merit consideration."

Permitting problems

Speaking before legislators, Slaiby said the federal regulatory process was too difficult, and took too long to get permits approved.

An Environmental Assessment was done by the Minerals Management Service, the federal agency which both sold Shell the offshore leases in the Chukchi for $2 billion, and which does environmental regulation to protect the environment.

Slaiby, speaking before a friendly House Resources Committee, angrily denounced the permitting process delays as "outrageous" and "shameful."

Shell, he said, is spending $40 million preparing for exploration, without knowing whether it will even be able to drill.

"Clearly, this is not the way to run a railroad here," Slaiby said.

House Resources Committee Co-chair Craig Johnson, R-Anchorage, suggested that Shell might ask for a refund of its lease payments if it is unable to drill.

Slaiby called the permitting process in the United States "shambolic," and said it was the worst in the world.

"It's shameful performance, and it is performance that's not really duplicated anywhere else," he said.

Shell is having to pay the cost of the inefficient permitting process, he said.

If U.S. permitting regulations continue to hamper Shell, they'll go someplace else, Johnson warned.

Oceana's Levine said the process to obtain environmental drilling permits in the Arctic was too lax, and that permission to drill has been done despite many unanswered questions about the risks of spills and the ability to clean them up in an icy environment hundreds of miles from major support centers.

Levine said the Gulf spill is evidence that either enforcement of drilling safety rules were too lax or the laws themselves are too weak.

Industry safety

In the days before the Gulf spill, drilling advocates in Alaska were confident in the industry's safety record. It had been more than 20 years since the Exxon Valdez spill.

Prior to BP's Gulf disaster, pro-drilling Alaska legislators were touting the safety of the industry.

Rep. Johnson noted at the time that Hurricane Katrina had dislocated some 100 offshore drilling platforms.

"My understanding is that there was ... no oil spilled out of that," he said.

That is the kind of performance that Johnson said he wanted to see in Alaska.

"Are we going to be able to expect that same kind of technology?" he asked.

Toohey said the Gulf platform operators knew the storm was coming and shut them down. It would do the same in the Chukchi as ice approaches, he said.



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