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Court halts Shell's plan to drill for oil in Beaufort Sea news
22 November 2008

The Ninth Circuit Court of Appeals, a federal appeals court, has blocked a major oil-drilling programme of Royal Dutch Shell in the Beaufort Sea off Alaska's North Slope, saying the US government has failed to conduct an environmental study before issuing the company's drilling permit.

The court has ruled that federal officials had failed to address the consequential environmental impact when granting permission to Shell to drill wells over a three-year time frame.

Rapping the US mineral management service, the court said that it did not pay adequate heed to the risks of oil spills, hindrances that it would pose to migrating whales, disruptions to traditional hunting lifestyle of Inupiat Eskimos, and other potential harms from Shell's plan to drill at a prospect called Sivulliq.

It also said that before it authorises any drilling, the US mineral management service needs to start afresh a review and maybe even launch a full-scale environmental impact statement instead of an abbreviated environmental assessment. "There remain substantial questions as to whether Shell's plan may cause significant harm to the people and wildlife of the Beaufort Sea region," the court said.

The ruling is in conclusion to a temporary order that was issued last year, which had placed on hold Shell's drilling at Sivulliq, around 16 miles off the coast of northern Alaska. The prospect was earlier called Hammerhead, and is known to hold oil. Though it was earlier drilled decades ago, drilling was halted on account of economic reasons. The ruling was in response to a couple of combined lawsuits that had been filed by environmental and Native groups, the North Slope Borough and the Alaska Eskimo Whaling Commission.

The mineral management service defended its environmental review process, and issued a statement expressing their disappointment on the ruling. ''We intend to review the court's ruling closely," the statement said, while adding that the mineral management service did conduct the required ''hard look'' to see if an environmental impact statement was necessary.

In a statement, oil company Shell said that the mineral management service had done a "thorough job", and Shell "met or exceeded requirements for responsible Arctic exploration."

"The decision by the court delays drilling and extends the timeline it will take to bring this much-needed US production on-line," Shell's statement said.

Sivulliq is an integral part of Shell's programme to develop oil and gas resources in Alaska's federally-managed outer continental shelf. That is an area where there has been little development to date. Shell spent around $2.1 billion earlier in the year for exploration rights in the remote Chukchi Sea off Alaska's northwest coast, over an above a combined $83.7 million spent to acquire Beaufort Sea exploration rights in the mineral management service lease sales in 2005 and 2008. The oil company also initiated a broad program to conduct seismic tests in the Chukchi and Beaufort, that will gather geological data needed ahead of drilling.

The Alaska outer continental shelf holds an estimated 26.6 billion barrels of undiscovered recoverable crude oil. Additionally, it is assumed to hold around 132 trillion cubic feet of undiscovered recoverable natural gas, as per the most recent mineral management service resource estimates. Almost all of those reserves are said to fall in the Chukchi and Beaufort Seas.

Shell had abandoned US arctic exploration 21 years ago. Lawyers for Shell and the Bush administration, which had supported the company in the case, deposed before the appeals court at a hearing in December saying that studies showed that the drilling did not have a significant effect on the whales.

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Court halts Shell's plan to drill for oil in Beaufort Sea