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Vol. 16, No. 4 Week of January 23, 2011
Providing coverage of Alaska and northern Canada's oil and gas industry

Alaska Offshore Special Report: Oh yes there is, oh no there isn’t

State of Alaska, federal government present opposite views of whether DOI imposed an Arctic drilling moratorium in 2010

Alan Bailey

Petroleum News

Federal judge Ralph Beistline in Alaska District Court has a problem in the case in which the State of Alaska has sued the U.S. Department of the Interior, with the state claiming that Interior imposed a drilling moratorium on the Arctic outer continental shelf in 2010 without going through the public process mandated by the U.S. Administrative Procedures Act.

“The court … is faced with a glaring factual dispute that must be addressed, i.e. whether or not there is a moratorium in place, actual or implied, on shallow well oil drilling in Alaska,” Beistline wrote in a court order dated Dec. 28. “Plaintiffs say there is. Defendants say there is not. … Either there is or there is not. The public, and certainly the court, is entitled to know.”

Beistline gave the state and the Department of the Interior until Jan. 14 to present their positions on this question.

Public statements

The state’s case revolves around statements made in public by Interior Secretary Salazar: In a May press conference Salazar said that, following the Gulf of Mexico Deepwater Horizon disaster, he was postponing consideration of a Shell application to drill in the Chukchi Sea in 2010, and in September Salazar told reporters that Interior had imposed an Arctic drilling moratorium.

Concerned about potential further delays in Shell’s planned Arctic drilling, the state filed its lawsuit. However, Interior denied imposing a moratorium, saying that statements to the press do not constitute final agency actions.

In a statement filed with the court on Jan. 10, assistant attorney general Ignacia Moreno, writing on behalf of the U.S. Department of Justice, said “the Department of the Interior has no moratorium in place — actual, implied or otherwise — on the permitting of oil and gas exploration and development, including shallow water drilling, in the Alaska outer continental shelf.” The Justice filing was accompanied by a written statement by Walter Cruickshank, deputy director of the Bureau of Ocean Energy Management, Regulation and Enforcement, testifying that no moratorium is in place, and providing a status report on the BOEMRE processing of Shell’s plan to drill in the Beaufort Sea in 2011.

“The court should grant defendant’s motion for summary judgment and dismiss this case,” Moreno wrote.

No explanation

In the state’s written response, filed Jan. 14, Alaska Attorney General John Burns said that the Department of the Interior had still failed to explain “how there could not be a moratorium when Secretary Salazar himself testified that there is.” Contrary to suggestions by Interior that a moratorium is a ban, a dictionary definition of a moratorium is a “delay,” Burns wrote. And Burns quoted four public statements by Salazar in which the secretary talked about placing Shell’s planned 2010 Chukchi Sea drilling on hold, with one of those quotations referencing “the moratorium on the Arctic.”

The fact that Interior is processing Shell’s current application to drill does not indicate that a blanket drilling moratorium has been lifted, given that Secretary Salazar has not reversed his stated public position that there is an Arctic moratorium, Burns wrote.

Meantime, Shell is grappling with problems raised by an Environmental Appeals Board decision requiring the Environmental Protection Agency to rework Shell’s Beaufort Sea air quality permit, a situation that places Shell’s plan to drill in the Beaufort in 2011 in doubt. Shell spokesman Curtis Smith told Petroleum News Jan. 17 that the company is still seeking a way forward and has no specific date for a final decision on its 2011 drilling.



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