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Shell gets partial go-ahead off Alaska coast

By Steven Mufson,August 30, 2012

Interior Secretary Ken Salazar said Thursday that Royal Dutch Shell would be allowed to start “certain limited preparatory activities” for oil drilling in the environmentally sensitive waters off Alaska’s northwest coast.

Salazar said that Shell can now construct what is known as a mud-line cellar, a 40-foot-deep structure needed to install a blowout preventer, a device that can help head off spills. He said Shell would also be allowed to drill a “top hole” as deep as 1,400 feet and set steel pipe and concrete.

“Today’s action does not authorize Shell to drill into oil-bearing reservoirs,” Salazar said. The most shallow of those reservoirs are about 4,000 feet deeper, Shell said.

The partial go-ahead was given to Shell because time is running out on the open-water season before the ice returns and prevents drilling. Shell is scrambling to drill one or two wells, though it had initially hoped to complete five or six in the Chukchi and Beaufort seas this year.

Before it drills into oil reservoirs, the company will have to complete the certification of the Arctic Challenger, a 4,700-ton spill containment vessel required by Interior’s Bureau of Safety and Environmental Enforcement.

Salazar said that Shell estimates that the Challenger could be certified in four or five days. Shell said it would take two weeks more to move the vessel to the drilling area 70 miles off the coastal Inuit town of Wainwright.

The Interior Department has said that Shell would not be allowed to drill in the Chukchi Sea past Sept. 24, which would leave enough time for a relief well to be drilled in the event of a spill. The deadline is Oct. 31 in the Beaufort Sea.

Shell Vice President Pete Slaiby said in a conference call that it would take 20 to 24 days to drill a well, including the preliminary work approved by Interior. If the well can’t be completed in time, Shell can seal it and resume drilling next year. Slaiby said that it would be “very, very difficult” to complete the Burger A well in the Chukchi without an extension of the current deadline.

The company’s exploration plans have drawn protests from environmental groups worried about a possible spill in an area that is icy and dark much of the year and is home to seals, walruses and whales. The BP oil spill in the Gulf of Mexico in 2010 heightened anxieties over spills.

“The Department of Interior should not be bending over backward to accommodate a company that simply cannot get its act together,” said Michael LeVine, Pacific legal counsel at Oceana, a conservation group opposed to offshore drilling. “The window is closing and the company doesn’t have anyone to blame but itself.”

Shell has spent seven years and more than $4 billion buying leases and preparing for exploration in the Chukchi Sea. The Obama administration, despite environmental concerns, has supported Shell’s exploration program, but it has required Shell to comply with stiff guidelines for safe drilling and spill response.

“We appreciate the effort the Department of Interior has made to understand, scrutinize and support this project of national significance,” Shell said in a statement. “It’s moving in the right direction,” Slaiby added later. “It’s important that we get it right.”

Sen. Lisa Murkowski (R-Alaska) said the Interior Department’s decision was “a positive step.” Murkowski said, “While we would all like to see a discovery this summer, the most important thing is for Shell to continue to make progress and demonstrate once again that Arctic drilling can be done safely.”