Interior to process Shell permit

Posted: Thursday, December 02, 2010

Interior Secretary Ken Salazar said Shell's application to drill an exploration well in the company's Beaufort Sea federal offshore leases next summer will be processed.

Other federal outer continental shelf leases in the Arctic "will be honored," but there will be further reviews before additional Arctic OCS sales are held, Salazar said.

Shell is still assessing the decision, announced Dec. 1, but "we see it as a positive signal," Shell spokesman Curtis Smith said.

Shell also hopes to explore leases it holds in the Chukchi Sea, but decided to focus on one well the Beaufort Sea in 2011. The company is primarily interested in an area offshore Camden Bay east of the Prudhoe Bay oil field.

Alaska U.S. Sen. Mark Begich said he was pleased at Salazar's decision.

"This decision to clear the way for responsible oil and gas in Alaska's resource-rich offshore waters is great news for our state and the nation," Begich said in a statement.

Salazar called Begich Dec. 1 to inform him of Interior's decision to clear the way for Shell to obtain its final permits for exploration in the Beaufort Sea next summer.

The Arctic announcement was part of new strategy involving outer continental shelf drilling in all U.S. waters.

"As a result of the Deepwater Horizon oil spill, we learned a number of lessons, most importantly that we need to proceed with caution and focus on creating a more stringent regulatory regime," Salazar said in a press conference. "As that regime continues to be developed and implemented, we have revised our initial March leasing strategy to focus and expend our critical resources on areas with leases that are currently active. Our revised strategy lays out a careful, responsible path for meeting our nation's energy needs while protecting our oceans and coastal communities."

Consistent with the president's executive order on National Ocean Policy, the modified plan also confirms many of the actions that were announced in March, including environmental analysis to determine whether seismic studies should be conducted in the Atlantic Ocean, and scientific analysis of the Arctic to determine if future oil and gas development could be conducted safely.

Salazar said the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) would hold public meetings in to gather information for an environmental impact statement so that Salazar can decide whether and where to schedule Alaska lease sales under the 2012-17 program.

The public meetings will cover the Beaufort, Chukchi and Cook Inlet planning areas.

The assessment will include information from a U.S. Geological Survey study looking at resources, risks and environmental sensitivities in Arctic areas. It will include input from other federal agencies, including the National Oceanographic and Atmospheric Administration, Salazar said.

"Though no further lease sales in the Chukchi and Beaufort seas will be held under the 2007-2012 program, BOEMRE will continue to honor existing leases in the Arctic," the Interior Department said in a written statement issued following the press conference.

"Currently, one application to drill in the Arctic is pending. The application to drill, submitted by Shell, proposes to drill one exploratory well in the Beaufort Sea in the summer of 2011. The BOEMRE is processing that permit request," according to the written statement.

The bureau is preparing additional environmental analysis of the area in light of Shell's permit application, which it will release for public comment prior to making a final decision on the application, the agency said in the statement.

In his comments Begich said, "It's unfortunate the development was side-lined by this spring's oil spill in the Gulf of Mexico, but I'm pleased the Obama administration took a hard look and made the right decision,"

Begich noted that Shell has gone to great lengths to accommodate local concerns, such as imposing a timeout on development during the fall subsistence whale hunt, signing a conflict avoidance agreement with the Eskimo Whalers Commission, staging resources to prevent a spill or deal with one in the remote chance that it occurs and providing funds for additional scientific research.

The senator commended tough negotiating by North Slope Borough Mayor Edward Itta for ensuring that subsistence resources are protected with any oil and gas development.



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