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Vol. 12, No. 41 Week of October 14, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

Feds will support Shell

Luthi: MMS won’t back off, stands behind decision to allow Beaufort Sea drilling

By WESLEY LOY

Anchorage Daily News

The federal government will fight to clear the way for Shell’s exploratory oil drilling campaign in the Beaufort Sea off Alaska, a top U.S. official said Oct. 10.

The U.S. Minerals Management Service in February approved Shell’s Arctic drilling plan, finding the proposed exploration wouldn’t cause significant harm to endangered bowhead whales or the environment. But the Dutch oil giant hasn’t been able to proceed with its Beaufort Sea drilling because a San Francisco court has blocked the work at the request of the North Slope Borough, environmental groups and other organizations.

The groups say regulators failed to adequately consider the potential impacts of industrial noise and spills associated with oil exploration.

The 9th U.S. Circuit Court of Appeals has scheduled the case for a Dec. 4 hearing.

On Oct. 9, government lawyers filed papers arguing that the court challenges should be thrown out because they’re groundless and, in some cases, were lodged after a deadline had passed.

Randall Luthi, whom the Bush administration appointed director of the Minerals Management Service in late July, said in an interview Oct. 10 in

Anchorage that his agency stands behind its decision to let Shell drill. “I’m proud of the environmental work that we’ve done,” he said.

Shell had planned to drill three wells in its Beaufort Sea Sivulliq prospect, formerly known as Hammerhead, during the 2007 open water season, which Shell told the court was forecast to last through early December.

Luthi, who is an attorney, cattle rancher and former state legislator from Wyoming, said he couldn’t predict how the court might ultimately rule.

However, he and the agency’s Alaska director, John Goll, said they have no plans to back off leasing new Arctic offshore acreage to prospective drillers.

The agency has a sale scheduled for early next year covering millions of acres in the remote Chukchi Sea, which stretches west of the Beaufort Sea to Russia.

A full environmental impact statement already has been done for that sale, Goll said.

Luthi took over as head of MMS, an agency within the Interior Department, after Johnnie Burton retired at the end of May.

Burton and the service drew congressional criticism over whether the agency was moving fast enough to collect royalty money owed the government from flawed Gulf of Mexico oil and gas leases dating back to the Clinton administration.

Much of the U.S. coastline is closed to leasing. The open areas are in the Gulf of Mexico, a small section off California and Alaska. These zones can play a big role in reducing the country’s widening dependence on energy imports, Luthi said.

The agency also is planning to encourage more alternative energy derived from wind, waves and currents, he said.

—Petroleum News

contributed to this story



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