POLITICS: PennAve

After a year on ice, Shell looks to Arctic drilling

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White House,Interior,Alaska,Climate Change,PennAve,Energy and Environment,Chuck Hagel,Zack Colman,Oil,Natural Gas,Lisa Murkowski,Offshore Drilling,Arctic,Shell

Environmental groups plan to pressure the White House to block offshore drilling in the Arctic as Royal Dutch Shell gears up to start drilling there this summer.

Shell, which was awarded the first U.S. lease to drill in the Arctic, has submitted a revised plan to the Interior Department's Bureau of Ocean Energy Management to finish one exploratory well and start four others in the Chukchi Sea northwest of Alaska following a series of blunders in 2012 that put its Arctic efforts on ice. But the bureau said in a Jan. 14 letter to Shell that it still has concerns about how the company would manage "deficiencies" in oversight and management like it experienced in 2012.

The list of problems included the grounding of its Kulluk rig, a containment dome — used to trap hydrocarbons in the event of a spill — that failed to properly deploy, repeated air emissions permit violations and other equipment-related delays.

Shell's plans grew murkier Jan. 22 when the U.S. Court of Appeals for the 9th Circuit ruled that the Bureau of Ocean Energy Management used an "arbitrary and capricious" estimate of 1 billion barrels of recoverable oil when awarding the lease — an analysis that potentially understated the environmental risks of development, putting in doubt the validity of the bureau's lease sale.

"It would be very surprising if Shell were allowed to drill exploratory wells," said Michael LeVine, Pacific senior counsel with conservation group Oceana.

Green groups say Shell's difficulties prove drilling in the Arctic is too risky. Some plan to protest in the coming months to get the Obama administration to pull back on Arctic activity.

In a Jan. 16 letter, 18 green groups urged President Obama to ditch his "all of the above energy" strategy, including Arctic drilling, saying that the policy "would be fundamentally at odds with your goal of cutting carbon pollution and would undermine our nation's capacity to respond to the threat of climate disruption."

The White House hasn't backed off the Arctic, despite Shell's problematic start. In May, it outlined a framework for managing energy development there.

The Arctic's prospects are lucrative — the Bureau of Ocean Energy Management estimates the Chukchi area alone holds 15 billion barrels of recoverable oil and 78 trillion cubic feet of recoverable natural gas. The Beaufort Sea, which Shell included in its 2012 plan but not this year's, could hold 8 billion barrels of oil and nearly 28 trillion cubic feet of natural gas.

With Russia, Norway, Canada and Denmark, among others, moving to develop the Arctic, some lawmakers are pushing the White House to move faster.

"On par with the other Arctic nations, we are behind — behind in our thinking, behind in our vision," Sen. Lisa Murkowski, R-Alaska, said earlier this month.

The United States already is doing "bang-up job of producing oil" — output outpaced imports in October for the first time in 18 years — so the Arctic has to be the next play, said Sierra Club Alaska Program Director Dan Ritzman. He said he hopes to keep Shell out of the Arctic this summer and to prevent the Obama administration from offering the next round of Arctic leases in 2016 and 2017.

"You don't have to do everything everywhere. There are places that, just because there's oil there, they should not be open to oil and gas development," he said.

The Obama administration has stressed balancing energy development with protecting ecosystems vulnerable to oil spills and the effects of a warming planet.

Defense Secretary Chuck Hagel said in a November speech that growing global energy demand and shrinking sea ice — largely from climate change — is "giving rise to an unprecedented level of human activity," which includes countries shifting energy development to the Arctic.

"While the opening of the Arctic will create unprecedented challenges, it will also create historic opportunities," Hagel said.

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