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Vol. 12, No. 29 Week of July 22, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

Still more hurdles

NSB, Earth Justice appeal EPA permit; Shell remains firm on Beaufort plans

Alan Bailey

Petroleum News

Anyone who’s placed bets on whether or not Shell will drill any exploration wells in the Beaufort Sea this summer must be having some sleepless nights. In the latest twist in the “will they, won’t they” saga of the company’s plans to punch three holes into the Sivulliq prospect on the west side of Camden Bay, the North Slope Borough and Earth Justice have both appealed to the Environmental Appeals Board the granting of minor air quality permits for the Sivulliq drilling, Dan Meyer from U.S. Environmental Protection Agency’s Seattle office told Petroleum News on July 17.

In early June, EPA issued the permits for operations by the Kulluk and Frontier Discoverer, the two drill ships that Shell plans to use to drill at Sivulliq. But people who commented on the draft permits prior to permit issue had until July 16 to appeal the EPA decision.

The permits will not now go into effect, pending an appeals board hearing. This type of appeal typically takes several months to process but it was possible that the appeals board might expedite the process in this case, Meyer said.

Earth Justice is representing environmental organizations including Resisting Environmental Destruction on Indigenous Lands (or REDOIL) and Northern Alaska Environmental Center, Meyer said. According to its Web site, REDOIL “consists of grassroots Alaska Natives of the Inupiat, Yupik, Aleut, Tlingit, Gwich’in, Eyak and Denaiana Athabascan tribes who have formed a network to address the human and ecological health impacts of the unsustainable development practices of the fossil fuel industry in Alaska.”

Borough opposition

The North Slope Borough has consistently opposed offshore development in the Beaufort and Chukchi seas because of the borough’s concerns about potential environmental impacts. Among other issues, no one has successfully demonstrated technologies for cleaning up an oil spill in Arctic waters, the borough has said in the past.

Mayor Edward Itta of the borough has said that the borough wants to work with industry to find solutions to the borough’s concerns but that industry is trying to move too fast into offshore developments that could impact the Native way of life.

“We need you to understand that you cannot separate the ocean from us. … We are tied in intricately,” Itta said.

And, without tax jurisdiction over the Alaska outer continental shelf, the borough has also said that it sees OCS oil and gas development as likely to disrupt subsistence hunting activities without bringing significant benefits to the North Slope communities.

In its appeal against the EPA air quality permits, the borough said that EPA had not responded adequately to the borough’s comments on the draft permits and that the agency “relied on erroneous findings of fact and conclusions of law in issuing the permits.” The borough also said that EPA had scheduled hearings on the permits during the subsistence hunting season, when many people were unable to attend, “despite NSB’s protest.”

The permits consider each drillship operation at an individual drilling site to be a separate permitted operation, unless the sites or drilling operations are closer than 500 meters. The borough slammed this situation, saying that the emissions from both vessels across multiple drill sites should be aggregated, thus taking into account total emissions that would require a major emissions source permit, rather than minor permits.

The borough also questioned the emissions data that Shell submitted to EPA in support of the air quality permit applications and said that a commitment by Shell to keep emissions below major emissions levels is not, in practice, enforceable.

Lawsuits

In April the North Slope Borough, the Alaska Eskimo Whaling Commission and the Inupiat Community of the Arctic Slope jointly appealed to the Department of the Interior’s Board of Land Appeals a February decision by the U.S. Minerals Management Service to conditionally approve Shell Offshore’s Beaufort Sea exploration plan.

“The proposed exploration activities involve extensive drilling operations (involving multiple icebreakers, drilling platforms and aerial support) within the Beaufort Sea,” the appeal petition said. “These activities threaten to inflict significant and irreparable damage upon these subsistence resources and the communities they support without an adequate consideration of the environmental impacts. … Appellants have relied upon the harvest of bowhead whales for thousands of years for their subsistence way of life.”

Under U.S. federal statutes relating to the outer continental shelf, that petition has since been referred to the U.S. Court of Appeals for the 9th Circuit, along with two other petitions for review of the MMS exploration plan approval. One of those other petitions is from the Alaska Wilderness League, the Natural Resource Defense Council and the Pacific Environment and Resources Center. The other petition is from REDOIL, the Center for Biological Diversity and the Sierra Club.

On July 16, the 9th Circuit court issued a consolidated briefing schedule for all of the court cases: opening briefs are due on Aug. 17 and answering briefs are due on Sept. 26.

ACMP consistency

The North Slope Borough has also challenged Alaska’s Office of Project Management and Permitting’s June 19 determination that Shell’s Beaufort Sea drilling program is consistent with the Alaska Coastal Management Plan. Certification of ACMP consistency is essential for final approval by MMS of Shell’s Beaufort Sea exploration plan, oil discharge prevention and consistency plan and any drilling permits that Shell might require.

“Based on an evaluation of your project, OPMP proposes to concur with your certification that the project is consistent with the ACMP,” Randy Bates, deputy director of OPMP, told Shell in a letter accompanying the division’s proposed determination of ACMP consistency.

But on June 25 the North Slope Borough formally requested that the determination be elevated for review by the commissioner of the Alaska Department of Natural Resources.

“The NSB requests the commissioner’s personal attention to this elevation (of the ACMP response) because of the seriousness of the issues raised, the potential impact to human health and the environment and the potential to set a long-term precedent for how Alaska Coastal Management Program reviews will be conducted for OCS projects,” said Johnny Aiken, director of the North Slope Borough Planning Department, in a letter to OPMP Acting Director Ed Fogels.

DNR is holding a meeting of interested parties on July 19, as part of the elevation process. The commissioner must complete his review within 45 days of the request for elevation, but MMS spokeswoman Robin Cacy told Petroleum News on July 18 that MMS expects the commissioner’s decision by July 28.

Mitigation measures

Meantime, Shell has been communicating with North Slope communities and planning for the mitigation of impacts on the natural environment and subsistence hunting.

In a February interview with Petroleum News, Rick Fox, Shell’s asset manager for Alaska, described some of the environmental mitigation measures that Shell plans in association with its Beaufort Sea activities.

Those measures include the deployment of passive acoustic arrays at intervals out from the coast, the use of about 70 locally recruited marine mammal observers, use of aerial wildlife monitoring and the operation of communications centers, manned by local residents, in all North Slope villages. The company has also commissioned a new oil spill response vessel to support its Beaufort Sea operations.

“The Alaska Eskimo Whaling Commission and Shell and various other parties during the season will be talking every day,” Fox said. “… We’re committed to good communications and constant dialogue with the people representing the whaling captains and with the agencies. … We’ll be adjusting and adapting all the time. … If communications are there you can work through a lot.”

Conflict avoidance agreement

Shell has been negotiating a conflict avoidance agreement with the Alaska Eskimo Whaling Commission and North Slope subsistence hunters. Conflict agreements of this type have become standard fare for companies operating offshore in the Beaufort and Chukchi seas during the summer open water season, when Native hunters take to the water in search of humpback whales and other marine resources.

In addition to making sure that its offshore activities will not compromise subsistence hunting, Shell needs a conflict avoidance agreement as part of the conditions for approvals from the National Marine Fisheries Service and the U.S. Fish and Wildlife Service for the unintended take of marine mammals. These approvals, in the form of Incidental Harassment Authorizations or Letters of Authorization, would ensure that Shell’s operations do not run afoul of the Marine Mammals Protection Act.

In its objections to the ACMP determination, the North Slope Borough indicated that finalizing a conflict avoidance agreement may still be some way off.

“Shell relies heavily on conflict avoidance agreements that were not available during the consistency review,” the borough said. “We understand these agreements will not likely be completed for the 2007 season.”

And reports have surfaced that negotiations regarding the conflict avoidance agreement may have run into difficulties over the length of time that Shell would have to shut down its drilling operations to avoid deflecting the migration of bowhead whales.

However, on July 13 Harry Brower, chairman of the Alaska Eskimo Whaling Commission, assured Petroleum News that conflict avoidance negotiations are still in progress. Brower declined to comment on the content of those negotiations.

“It is still in the works. … We’re still negotiating,” Brower said.

And Shell still sounds optimistic about resolving the various issues that the company faces — on July 13 Shell’s Alaska spokesman Curtis Smith told Petroleum News the company still plans “to conduct exploratory drilling, site clearance and seismic activities in the Beaufort Sea in 2007. We are also creating an oil spill response capability for the Beaufort as well as numerous minor exploration and pre-feasibility projects. Additionally … we have been talking extensively with local communities and will continue to engage a wide range of stakeholders to understand and address their issues.”

Smith also said “Shell believes Alaska has significant untapped potential that can play an important role in meeting the energy challenge and improving the lives and livelihoods of its residents.”



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