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Wednesday, 21 September 2011 09:00

Shell Gets Alaska Drilling Go-Ahead from EPA

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Shell OilShell Oil is set to tap Alaska's vast oil reserves now that the U.S. Environmental Protection Agency (EPA) has issued a final air quality permit to allow exploration development north of the Arctic Circle. The permit allows Shell to set up its Noble Discoverer drillship in the Chukchi Sea along with a fleet of support vessels including icebreakers and oil-spill response crafts. The company will be allowed to operate them no more than 120 days annually starting in 2012. The permit sets strict air pollution control limits on the drilling equipment.

In a press release, EPA explained the new permits are revised versions of those issued to Shell in 2010. At the time, environmental activist groups challenged them, and EPA's Environmental Appeals Board decided the original permits did not meet Clean Air Act standards. The new ones restrict fleet emissions by more than 50 percent from the levels allowed in 2010. EPA says it granted the new permits based largely on state-of-the-art pollution control equipment recently installed on the Discoverer and on Shell's agreement to further reduce emissions by adding more controls to its drilling fleet.

EPA also announced two other air permits yet to be finalized: one for Shell's drilling rig Kulluk to operate in the Arctic's Beaufort Sea next year and another for ConocoPhillips to begin drilling in the Chukchi Sea in 2013. It will issue final permits after public comment review.

Environmental groups are enraged at EPA's decision. Six activist organizations issued a statement decrying the permits as "inadequate" and "one more step down the path toward drilling operations ... that pose a grave danger to the Arctic environment." The Center for Biological Diversity, Earthjustice, Northern Alaska Environment Center, Oceana, Pacific Environment, and The Wilderness Society signed on to the statement. They claim EPA's pollution control requirements are too lax and Shell's operations will endanger the Alaskan coast. They also warned Shell's emissions could "accelerate Arctic warming to the detriment of Alaska Native communities and traditional cultural activities."

Others hail the permits as a crucial move toward energy independence and employment growth. U.S. Senator Mark Begich (D-Alaska) said, "Plain and simple, getting Shell Oil's Noble Discoverer into the Arctic means jobs. Research has shown that developing Alaska's outer continental shelf [OCS] means more than 50,000 jobs."

"Alaskan Outer Continental Shelf development is a genuine long-term economic stimulus plan," said Richard Ranger, a senior policy advisor with the American Petroleum Institute (API). He believes Shell's operations will "increase America's domestic energy supply, which will also create jobs and help increase government revenues." API estimates those revenues at $193 billion and cites a University of Alaska study predicting an average of 54,700 new jobs through the year 2057. OCS development will also mean an average of 700,000 barrels of oil per day for 40 years, an amount equal to U.S. oil imports in 2010 from Iraq and Russia combined. Extending the life of the Trans-Alaska Pipeline System is an additional benefit. API points out the new permits mean Shell's operations will not endanger human health or the environment.

According to Pete Slaiby, vice president of Shell Alaska, his company has spent nearly $4 billion on leases in the Chukchi and Beaufort Seas where he says conservative estimates of reserves amount to 25 billion barrels of oil and 120 trillion cubic feet of natural gas.

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