Shell drops plan for Arctic offshore drilling;
February 03, 2011
The company’s plans to drill in Arctic waters have long been under attack from environmental groups. After the BP oil spill, the Interior Department halted the oil giant’s plan to drill in 2010. In December, the Environmental Appeals Board remanded key air permits for Shell’s offshore oil and gas exploration activities back to the U.S. Environmental Protection Agency (EPA) for further work. Today Shell Oil announced the cancellation of its 2011 summer drilling plans in Alaska’s Beaufort Sea because of the Environmental Protection Agency’s refusal to issue a key air permit,
“This is just another delay resulting from the federal government dragging its feet, killing jobs and making us even more reliant on oil from the Middle East and elsewhere,” Governor SEan Parnell said in a prepared statement. “As we can see in Egypt, the situation is very unstable. We have plenty of domestic oil, and there is no reason that a company that has received over 34 permits for this program can’t get a timely decision from EPA on air quality issues," said Parnell.
Parnell said, “It is unfathomable that a company can buy federal leases but can’t get onto them within five years. It’s also unfathomable that they cannot get an air permit after five years when they can get one in the Gulf of Mexico within months. And finally, it’s unfathomable that this federal administration can’t act on the opportunity for jobs and economic growth.”
Sen. Lisa Murkowski (R-Alaska), the top Republican on the Energy and Natural Resources Committee blamed the Environmental Protection Agency. In a prepared statement Murkowski said, “The EPA’s refusal, or simple inability, to issue key permits in a timely fashion is indefensible. Shell has now invested roughly $4 billion and five years attempting to get the permits it needs, without success.”
Murkowksi said, "Alaska’s OCS contains potentially the largest undiscovered oil and natural gas reserves in the United States and will play a pivotal role in the future energy security of the country. Federal estimates put Alaska’s offshore energy potential at 27 billion barrels of oil and 132 trillion cubic feet of natural gas."
“New supplies of oil are essential to keeping the trans-Alaska pipeline in operation,” Murkowski said. “While my home state stands ready to do its part to keep energy affordable and to right the economy, the federal government continues to stand in our way.”
The trans-Alaska pipeline carries roughly 13 percent of the United State’s domestic production, down from a high of 20 percent.
President Obama has said he supports drilling in Alaska’s OCS, but after the oil spill in the Gulf of Mexico the president cancelled Shell’s 2010 exploration plans. Since then the administration has offered no clear guidance to Shell.
“The actions taken by this administration will result in all of us paying more for gasoline – not to mention the loss of jobs and revenue that responsible development bring,” Murkowski said. “We talk a lot about the economy, but rarely do our actions match our rhetoric. That’s unfortunate.”
Murkowski, the ranking member of the Senate Energy and Natural Resources Committee, called on the administration to immediately review the EPA’s handling of Shell’s permit applications. The EPA previously approved an air permit to allow Shell to proceed with exploration this summer, but the permit was revoked on appeal.
“The federal government’s inability to process a straightforward air permit calls into question its willingness to support a rational energy policy,” Murkowski said. “This and similar problems are damaging our economy and increasing our reliance on imported oil.”
U.S. Sen. Mark Begich (D-Alaska) said in a prepared statement, “I put the blame for this squarely on the EPA and the Obama Administration who have taken virtually every opportunity to block responsible development of Alaska’s resources. Their foot dragging means the loss of another exploration season in Alaska, the loss of nearly 800 direct jobs and many more indirect jobs. That doesn’t count the millions of dollars in contracting that won’t happen either at a time when our economy needs the investment."
Begich said, “Shell has been working diligently for five years and has invested billions of dollars to meet the regulatory and permitting requirements of the federal agencies. It is shameful to see another season lost."
“The President’s own Oil Spill Commission, in its final report released last month, found a moratorium on development in the Arctic is not justified and recommended moving forward on an Arctic energy development plan," said Begich.
Begich said, “I have talked to EPA Administrator Lisa Jackson multiple times, and will continue to make the case for Shell to be able to move forward with exploration. Shell is hoping to get the air permits it needs for 2012. We will continue to work with the company and the EPA to make it happen.”
Earlier this week, Sen. Begich pointed out the instability in Egypt and the potential for disruption of the 5 percent of the world’s oil supply that moves through the Suez Canal is further proof that America needs to move forward on a national energy plan focusing on increased domestic production of oil and gas. Shell’s prospects in Alaska’s Arctic are some of the best options in the U.S. at this time.
Alaskan Congressman Don Young (R) was disgusted with continual regulatory delays and uncertainty that forced Shell to forgo their 2011 exploration program in Alaska.
Young said in a prepared statement, “Unfortunately, this was inevitable. What did we expect? Shell has spent more than $3 billion and been ready to put Alaskans to work for the last few years but because of an inefficient bureaucracy and an overabundance of unnecessary regulations, they STILL have not been able to drill a single hole. We are making it near impossible for companies to do business in the US; where’s the incentive?"
"It is absurd and foolish and completely indicative of an Administration that has no interest in responsible resource development or a thriving economy," said Young. "All we hear about from the Obama Administration is ‘jobs jobs jobs’ but all we’re getting is lip service. Considering how any attempt at project development is shut down by the EPA, they sure aren’t interested in jobs for Alaskans!"
Young said, "The way this country is being crippled is infuriating. They won’t be happy until we’ve run all business out of the country and we’re back to traveling on dirt roads in covered wagons.”
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