Shell Clears Major Hurdle in Its Bid for New Arctic Drilling

By JOHN M. BRODER and CLIFFORD KRAUSS

A version of this article appeared in print on February 18, 2012, on page A15 of the New York edition

In a crucial step toward the ultimate approval of new oil drilling off the North Slope of Alaska, the Interior Department on Friday tentatively approved Shell’s plans for responding to a potential spill in the frigid Arctic waters.

Shell still needs to cross several more regulatory barriers before it will be permitted to begin drilling as many as six exploratory wells in the Chukchi Sea in July. But the green light from the Interior Department on the company’s oil spill response plan is a clear sign that the Obama administration is disposed toward allowing the drilling despite the dogged opposition of many environmentalists.

“Alaska’s energy resources — onshore and offshore, conventional and renewable — hold great promise and economic opportunity for the people of Alaska and across the nation,” Interior Secretary Ken Salazar said in a statement. “In the Arctic frontier, cautious exploration — under the strongest oversight, safety requirements and emergency response plans ever established — can help us expand our understanding of the area and its resources, and support our goal of continuing to increase safe and responsible domestic oil and gas production.”

“We are taking a cautious approach, one that will help inform the wise decisions of tomorrow,” Mr. Salazar said.

Shell has spent more than $4 billion over five years in its quest to exploit the vast oil and natural gas resources believed to lie beneath the Beaufort and Chukchi Seas off the north coast of Alaska. It has faced opposition from environmental groups and Alaska Natives who worry that extensive petroleum activities will foul the pristine seas and harm wildlife, including bowhead whales, ice seals, polar bears and walruses. Such environmental groups are likely to try to block any drilling in court if final federal approval is granted in coming months.

“We’re disappointed but not surprised,” said Brendan Cummings, senior counsel for the Center for Biological Diversity, an environmental group long opposed to Shell’s drilling plans. “I don’t see any way the Interior Department could be deemed in compliance with the law. There’s a lack of infrastructure and insufficient demonstrated ability to clean up in the Arctic. It’s likely that this approval will be challenged in court.”

Shell has proposed drilling up to six wells over the next two years within the Burger prospect, about 70 miles off the coast in approximately 140 feet of water.

Shell welcomed the decision, describing it as a “major milestone” in its plans to drill off the Alaska shoreline.

“We recognize that industry’s license to operate in the offshore is predicated on being able to operate in a safe, environmentally sound manner,” said Pete Slaiby, Shell’s top executive in Alaska. “Shell’s commitment to those basic principles is unwavering.”

Shell still must obtain permits from the Environmental Protection Agency for wastewater discharge and from the Interior Department’s Bureau of Safety and Environmental Enforcement to drill each specific well. The company must also demonstrate that its well-capping technology can work in the harsh conditions of the Arctic, and its drilling program must survive any court challenges.

Opponents said that Shell and the Obama administration had not fully absorbed the lessons of the 2010 Deepwater Horizon blowout and oil spill in the Gulf of Mexico, which killed 11 rig workers and spilled millions of gallons of crude into the gulf.

“This decision is premature,” said Marilyn Heiman, director of the Arctic program at the Pew Environment Group. “We need an additional two or three years of study to get the science right, to ensure proper monitoring and to protect wildlife.”

Ms. Heiman added, “They still don’t have standards for the Arctic, which is very different from the temperate waters of the gulf — the ice, the wind, the darkness. We think there are major gaps in this plan, and they need to take more time.”

Interior Department officials insisted that they had conducted an extensive scientific inquiry before moving ahead with the spill response plan. They also said this work would continue before and after Shell was allowed out on the water and that officials would conduct several spill response drills before any drilling began.

They have also shortened the season that Shell will be allowed to operate offshore to ensure that it has shut down operations and has time to take any remedial actions before ice forms in the Chukchi.

“This decision has been based on our new standards and our commitment to ensure the highest standard of safety and environmental preparedness in the world and our commitment to bringing science to all our activities in the Arctic,” said David J. Hayes, the Interior deputy secretary who is coordinating the Arctic offshore drilling policy.

Shell’s response plan is designed to ensure that in case of a blowout or spill, the well could be shut down and any oil discharged quickly contained. If necessary, and with approval, spilled oil could also be burned off. The company promises to have personnel and equipment specifically dedicated to spill control near the rigs at all times.

Boats, skimmers, booms, helicopters and barges will be on hand or at most an hour away from drilling rigs in case of an emergency. The equipment will all be specifically designed for harsh Arctic conditions, with reinforced hulls and materials designed for subfreezing weather. One skimmer, the 300-foot Nanuq, will be able to store 12,000 barrels of oil, and a tanker will have a 513,000-barrel capacity.

A separate rig would be available to come from nearby waters in case a relief well needed to be drilled to intercept and seal a leaking well.

The company says its blowout preventers are designed to close a well within seconds, and, learning from the BP disaster, the preventers have been enhanced with an additional set of shear rams. Tests will be done weekly. Shell also promises that its underwater capping system will be able to quickly close a leaking wellhead.