Providing coverage of Alaska and northern Canada's oil and gas industry
July 2012

Vol. 17, No. 27 Week of July 01, 2012

Shell rigs and support vessels Alaska-bound; wins 2 legal issues

A caravan of ships departed the Seattle-area on June 27 en route to Alaska, where they appear increasingly likely to conduct an offshore exploration campaign for Shell.

The Kulluk and Noble Discoverer drilling rigs and a fleet of support vessels left Seattle, Wash., around 6:30 a.m. Alaska time, bound for Dutch Harbor. Upon their arrival, the ships will wait for open water before continuing to the Chukchi and Beaufort Seas.

“The journey north marks the beginning of another historic offshore exploration program in Alaska,” the company said in a statement. “We look forward to adding to our long, successful history in the Beaufort and Chukchi Seas; providing jobs and verifying what could prove to be an extremely valuable natural resource base for Alaska and the nation.”

On June 25, the Bureau of Safety and Environmental Enforcement watched Shell conduct a test of the capping stack it will have on hand in the event of a blow out and oil spill.

“The successful deployment of Shell’s Arctic capping stack in Puget Sound means we are nearing the end of an extremely thorough inspection and permitting process that would allow for exploratory drilling in the Beaufort and Chukchi Seas this summer,” Shell said in a statement following the test. “While we remain confident in our pre-staged, three-tier oil spill response capability, Shell’s Arctic-engineered capping system will allow for the capture of hydrocarbons at the wellhead in the very unlikely event of a blowout.”

Shell must still get final drilling permits before beginning its campaign.

“I anticipate that those permits will be granted if Shell can meet the final conditions that are set forth by BSEE,” Interior Secretary Ken Salazar told the press on June 26.

That said, if Interior does issue the permits, “We will probably be sued,” Salazar acknowledged. “The reality of it is we get sued all the time, but I’m confident in the work that BOEM and BSEE and the Interior have done in this regard. It means that ultimately we will prevail as we already have in other aspects of litigation relating to the Arctic.”

Two legal victories

In more good news for Shell, the 9th Circuit Court of Appeals on June 27 denied a request from Greenpeace Inc. to stay an injunction against the environmental group.

The federal District Court in Alaska previously banned Greenpeace from occupying any of 19 vessels Shell plans to use for its upcoming drilling campaign. The group appealed the ruling, but also asked the court to stay the injunction while the appeal played out.

After learning that the court calendar likely wouldn’t yield a ruling until the fall, months after Shell expects to begin drilling, Greenpeace requested an “urgent consideration.”

The court denied the motion, though. The case will now proceed on its original timetable.

Additionally, the District Court in Alaska ruled in favor of Shell in a case concerning its oil spill response plans. After getting its plans approved by BSEE, Shell preemptively asked the court endorse the approvals before third parties could challenge the documents.

A coalition of groups asked the court to dismiss the case, but the court upheld it.

—Eric Lidji

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