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Vol. 17, No. 25 Week of June 17, 2012
Providing coverage of Alaska and northern Canada's oil and gas industry

BSEE director tours drilling ships; Shell strikes first on lawsuits

The Obama Administration recently began inspecting the rigs and safety equipment Shell plans to use for its offshore exploratory drilling campaign in the Arctic this summer.

Bureau of Safety and Environmental Enforcement Director Jim Watson visited the Kulluk and Noble Discoverer drill ships docked in Seattle on June 13 and planned to continue south to Portland to visit safety equipment Shell plans to use during drilling.

The BSEE and the U.S. Coast Guard plan to conduct tests of Shell’s capping stack and containment system in the coming weeks before issuing final permits for drilling, Watson said. If the agencies issue permits, they would test the equipment again in the Arctic.

The agencies might also conduct “unannounced” equipment and deployment inspections throughout the process, Watson said. “BSEE engineers and inspectors will conduct careful and thorough reviews to ensure our standards for safety and preparedness are met before any drilling is approved,” he added in a prepared statement. “If Shell meets the standards, BSEE professionals will ensure that any drilling activities comply with the most rigorous safety and oversight program ever deployed. Over the coming days and weeks, our team will be implementing and overseeing a rigorous schedule of tests, inspections, and exercises to ensure that safety is front and center every step of the way.”

Shell wants to drill two wells in the Beaufort and three wells in the Chukchi this summer.

Pre-emptive strike

Although Shell is closer to drilling in the Arctic than at any point in its most recent attempt to explore the region, it is continuing its pre-emptive strike against lawsuits in the run-up to its summer campaign. The company recently asked a federal court to endorse a series of U.S. Fish and Wildlife Service authorizations for the exploration program.

The federal agency recently issued six authorizations — three each for the Beaufort and Chukchi seas — outlining how the company can interact with wildlife during its program.

On June 5, Shell asked the U.S. District Court for the District of Alaska to declare that the U.S. Fish and Wildlife Service complied with the federal Marine Mammals Protection Act and the National Environmental Policy Act when it issued the authorizations.

Calling a legal challenge to the authorizations “a virtual certainty,” Shell said it needs the court to endorse the ruling to get ahead of expected lawsuits that could upend its unforgiving timetable. The agency issued the authorizations only a month before the scheduled start of a seasonal drilling program expected to last only a few months itself, Shell said, making the authorizations “uniquely vulnerable to procedural litigation.”

The 14 environmental groups Shell listed as defendants in its request have “long expressed through both word and deed the intent to prevent drilling on the Alaska Outer Continental Shelf by any means necessary, including litigation” and have “followed through by filing challenges to every major approval related to offshore drilling in Alaska generally, as well as the approvals specific to Shell’s planned operations this summer.”

Generally, the authorizations concern “takes,” or the amount of a given species an applicant can or cannot “harass, hunt, capture or kill” in the course of some activity.

The current regulations for the Beaufort and Chukchi seas grew out of industry requests dating back to 2005, leading to guidelines for each sea. The U.S. Fish and Wildlife Service ultimately approved the limits against the protests of some environmental groups.

The authorizations outline the incidental taking of polar bears and walruses by harassment, in the legal sense, and intentional taking of polar bears for “deterrence.”

The rules are designed to have a “negligible impact” on species.

The authorizations remain valid until the end of November.

In a similar move to head off potential legal challenges, Shell previously filed pre-emptive lawsuits asking the court to endorse both its oil spill response plan and its incidental harassment authorizations from the National Marine Fisheries Service.

—Eric Lidji



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