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Shell lease approved, but hurdles remain

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Shell’s 2008 purchase of a licence to drill in Alaskan waters has been approved. Now it waits to be granted permission to do so

April 1, 2015 – 8:53pm – By Kevin McGwin

With the decision yesterday by the US federal government not to throw out the 2008 sale of drilling licences off Alaska’s northern coast, it is looking increasingly likely that Shell, an oil firm, will be able to resume its Alaska drilling campaign this year.

The decision, though widely bemoaned on social media by opponents, should have come as little surprise. After first being foreseen by The Guardian, a left-leaning British media outlet, last week, the National Petroleum Council, a federal advisory board led by industry executives, indicated what the outcome would be when it, perhaps not unsurprisingly, recommended on Friday that Arctic exploration not be delayed.

By Monday morning, a decision in favour appeared imminent. It was then that Robert Papp, a retired coast-guard admiral who is now America’s special envoy for the Arctic, all but telegraphed the outcome when he said he expected Shell and other oil firms to resume drilling in the area at some point.

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Papp carries no approving authority, but given his clout in maritime issues and his scepticism of drilling under challenging conditions including the deep water of the Gulf of Mexico and the extreme weather in the Arctic, when he speaks positively on the matter, journalists take note.

In his comment to Reuters, a news bureau, Adm Papp noted Shell had invested significantly in preventing a spill. “They understand it’s very important for their company, and they also understand that it’s very important from a public relations standpoint as well. So they get it.”

Officially, Shell’s exploration campaign in the Chukchi Sea has been postponed by legal action challenging the validity of the 2008 licence sales. With those challenges now apparently put to rest by Monday’s decision, Shell has three hurdles remaining.

First it must ask the BOEM, a regulator, to approve both its overall exploration programme and permits for individual drills. Secondly, it must get its rigs into place. Thirdly, it must run the gauntlet of public opinion.

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The BOEM will take at least a month to issue its decision, but despite a pair of problems with Shell’s 2012 drilling campaign, regulators have expressed their satisfaction with the firm. Shell only helped its cause by successfully passing a safety test last week, although detractors point out those tests were conducted in the Pacific Ocean, not the Arctic.

Getting the rigs in place could prove tougher. A pair of drilling rigs crossing the Pacific are being shadowed by Greenpeace, a conservation group. It is assumed they are headed for Seattle, where they would dock before heading north. Efforts are afoot, however, to spoil any plans to use the city’s port.

In addition to a lawsuit brought by a group of national and local conservation groups, the city council last week submitted a letter to Sally Jewell, the interior secretary and a former Seattle resident, asking her not to approve the sale. Yesterday, Jay Inslee, the state’s governor, sent a similar, if less strongly worded, letter of his own.

When it comes to the third hurdle, many in the industry have already conceded the fight. “The environmentalists have outflanked us entirely,” Shawn Denstedt, a Canadian solicitor knowledgeable of indigenous and energy development issues, said during a conference in Copenhagen last week.

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Denstedt suggested that the use of social media had allowed for the emergence of what he saw as a form of co-ordinated mob rule that allowed individuals who had no stake in individual projects or their outcome to contribute to their derailment.

While Denstedt argues that undermines the official approval process, conservation groups counter that their methods reflect the will of the population at large.

“The Arctic has become the iconic battleground for the global climate movement, so we can expect to see a huge reaction against this in the US and across the globe,” said Ian Duff, a Greenpeace spokesperson, in a statement typical of many of those being expresed by opponents.

The response from within the Arctic, on the other hand, will likely be somewhat more muted.

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