Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Bloomberg Customers

The Associated Press December 16, 2011, 4:48PM ET

BOEM conditionally approves Shell Arctic drilling

The federal Bureau of Ocean Energy Management on Friday conditionally approved a plan by a subsidiary of Royal Dutch Shell to drill exploration wells in the Chukchi Sea off Alaska's northwest coast.

One condition will be lopping 38 days off the drilling season to make sure the company has enough time to cope with a spill or a wellhead blowout before sea ice moves into the drilling area.

Shelf Gulf of Mexico, Inc. proposes a multi-year exploration drilling program in the Chukchi beginning in July. The plan proposes drilling up to six wells in the Burger Prospect about 70 miles off the coast in water about 140 feet deep. Shell contends it can conduct safe operations in the relatively shallow water.

Exploratory drilling is strongly opposed by environmental groups and some Alaska Native groups that want to keep large-scale industrial development out of the Arctic Ocean because of risks to whales, polar bears, walrus and other marine species, and to protect the subsistence lifestyle of Native Alaskans who depend on the ocean for subsistence hunting and harvesting.

BOEM Director Tommy P. Beaudreau in a prepared statement said that agency scientists and experts carefully scrutinized Shell's plan.

"We will continue to work closely with agencies across the federal government to ensure that Shell complies with the conditions we have imposed on its Exploration Plan and all other applicable safety, environmental protection and emergency response standards," he said.

A spokesman for Oceana said the approval was made despite gaps in basic scientific knowledge of the region.

"We don't have any demonstrated capacity to respond to a spill in Arctic conditions," said Mike LeVine in Juneau.

Shell Alaska spokesman Curtis Smith said in an e-mail response that the company was looking over the announcement and approval conditions.

BOEM in its announcement listed conditions Shell must follow. Among them will be a requirement to halt drilling with enough time before the end of the open water season to cope with possible oil spills. That means leaving time to perform cap and containment operations and crude oil cleanup before ice forms.

With current technology, the agency said, Shell would have to stop drilling 38 days before Nov. 1, the earliest date forecast for ice over the drill site. That would also give Shell a window for drilling a relief well if one was required to control a blowout, the agency said.

U.S. Sen. Mark Begich, D-Alaska, said in a release he was not happy with the decision to cut the drilling season by 38 days. He said Alaska has done off-shore exploration safely in the past and the technology is better than ever.

"I am concerned that today's short-sighted decision is influenced by election year politics instead of the long-term energy and jobs needs of our country," he said. "I am disappointed that the Administration has diverted from months of positive progress and thrown this last-minute monkey wrench into Arctic development."

According to the agency, Shell will have to confirm the availability of its response equipment, which includes a capping and containment system.

Shell must also demonstrate it will take avoid conflicts with subsistence activities, which include whaling.

Shell faces other regulatory or legal hurdles before drilling may begin.

The federal Bureau of Safety and Environmental Enforcement reviews and must approve Shell's oil spill response plans for the Chukchi.

An air permit issued by the Environmental Protection Agency has been challenged and is undergoing review by the agency's appeals board.

Environmental groups challenged the 2008 lease sale conducted by the Minerals Management Service, claiming the agency ignored environmental law requirements. The Interior Department conducted supplemental environmental work and claims flaws have been corrected. A federal court judge could decide the supplemental work was not sufficient.

Shell also needs permits from the National Marine Fisheries Service and the U.S. Fish and Wildlife Service for authorization to operate under the Marine Mammal Protection and the Endangered Species Act.

BW Mall - Sponsored Links

Buy a link now!