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Vol. 16, No. 41 Week of October 09, 2011
Providing coverage of Alaska and northern Canada's oil and gas industry

BOEM affirms 2008 Chukchi Sea lease sale; Shell plan already in

On Oct. 3 the Bureau of Ocean Energy Management announced its record of decision, upholding the February 2008 Chukchi Sea lease sale, based on a new supplementary environmental impact statement for the sale.

The SEIS comes as a result of a July 2010 federal District Court for Alaska ruling in an appeal against the lease sale by the Native Village of Point Hope, the Inupiat Community of the Arctic Slope and 12 environmental organizations. The ruling required BOEMRE, BOEM’s predecessor agency, to make changes to some aspects of the original EIS for the lease sale and the court banned all lease-related oil and gas exploration activities in the Chukchi Sea until the changes are made and the lease sale re-affirmed.

Submitted to court

BOEM has submitted its record of decision to the court, which will now presumably need to decide whether the agency has adequately complied with the court order. The court had set an Oct. 3 deadline for submission of the SEIS and record of decision, to allow Shell sufficient time to plan for Chukchi Sea drilling in 2012 if the 2008 lease sale was re-affirmed. BOEM published the final SEIS on Aug. 18, but needed to accommodate a final public comment period before issuing its record of decision.

“The SEIS, in accordance with the court order, provides additional analysis to supplement the NEPA review originally completed in 2007 for Lease Sale 193 (for the Chukchi Sea)” BOEM said in announcing its record of decision. “Specifically, the bureau analyzed the potential impacts of natural gas development and further reviewed the relevance and importance of information identified as missing or unavailable in the 2007 analysis. The SEIS also analyzes the environmental impacts of a hypothetical very large oil spill scenario following the 2010 Deepwater Horizon tragedy in the Gulf of Mexico.”

Shell, ConocoPhillips and Statoil all purchased leases in the 2008 lease sale. All three companies are pursuing active Chukchi Sea exploration programs, with Shell wanting to start drilling in the Chukchi in 2012. BOEMRE placed its review of Shell’s Chukchi Sea exploration plan on hold as a consequence of the court ruling.

Responses to decision

“Secretary Salazar’s positive record of decision affirms Lease Sale 193 and clears the way for BOEM to conclude the review of Shell’s Chukchi Sea exploration plan,” said Shell spokesman Curtis Smith in response to the BOEM announcement. “We believe the Chukchi plan we submitted in May of this year is technically and scientifically sound and we look forward to exploring this critical part of our Alaska portfolio in 2012.”

The specter of new oil and gas exploration, and possibly development in both the Beaufort and Chukchi seas has caused considerable concern among the Native communities of the North Slope, with that concern focused on the potential impacts of offshore industrial activities on traditional subsistence hunting. And while some sectors of those communities have negotiated with companies like Shell to agree on mitigation measures to protect traditional hunting activities, other sectors have remained adamantly opposed to offshore resource development.

“With today’s decision to finalize an illegal lease sale in waters that have been my people’s traditional hunting grounds for thousands of years, President Obama tells the Inupiat people of Alaska’s Arctic coast that our culture is disposable,” said Caroline Cannon, president of the Native Village of Point Hope, in response to the Oct. 3 announcement. “Because without adequate information about the ways in which the Chukchi Sea’s marine ecosystem functions and without a proven plan to clean up an oil spill in this ice-covered, extreme environment, oil drilling in our Arctic waters will spell disaster for our survival as a people.”

Preferred option

In its final SEIS, BOEM concurred with its original decision to hold the lease sale but to exclude from the sale a corridor extending 25 to 50 miles out from the Chukchi Sea coast. The agency has spelled out a series of environmental protection and safety measures that must be in place in association with lease-related oil and gas activities.

In the record of decision Interior Secretary Ken Salazar said that from a purely environmental perspective the preferred option would be to not hold the lease sale — that option would preclude any possibility of environmental impacts from oil and gas-related activities. However, the “no sale” option would not have satisfied BOEM’s obligations under the federal Outer Continental Shelf Lands Act to make the OCS available for “expeditious development,” subject to environmental safeguards and national needs, Salazar said.

Moreover, preclusion of oil and gas development from the Chukchi Sea would move the environmental risks associated with this development to other locations.

“Selecting this ‘no sale’ alternative would result in eliminating all sale-related benefits and could result in increased environmental risk to other areas of the United States outside the Chukchi Sea and to other areas of the globe that export to the United States,” Salazar wrote.

The “no sale” option would also have caused the cancellation of all 487 leases awarded from the 2008 lease sale.

—Alan Bailey

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