Shell Oil Co. chief complains of 'clumsy' government

Posted: Friday, February 27, 2009

WASHINGTON - Shell Oil Co.'s chief executive for North America, Marvin Odum, complained today that regulatory red tape has slowed the company's $2 billion investment in offshore leases in Alaska.

Coordination among government agencies overseeing offshore drilling has been "clumsy" in Alaska, Odum suggested after his testimony at a House of Representatives panel examining issues related to drilling in the outer continental shelf. When new areas are open to exploration, the federal government needs to make sure the regulatory agencies have adequate resources to handle the demands of the companies who've been awarded the leases, Odum said.

"Getting that done, the permits coordinated, different facets of government working together, I think has been a little bit clumsy and challenging as we enter a new area. So mine is simply a flag that says, here's an opportunity to learn from what's happened in just the last couple of years. In the spirit of good government, let's look for a way to do it even more efficiently as we move into new areas."

"It's not a streamlining issue, it's more all the agencies of government working in a coordinated fashion," Odum added. "Some of it's taken longer than it might have otherwise, and I just see opportunities. It's the same look I take in my own company all the time, which is, 'How do I make us more effective and efficient, the way we work as a company?'"

Shell returned to Alaska in 2005, when the company won offshore leases offered for sale by the federal Minerals Management Service. Since then, the company has spent about $2 billion on leases in the Beaufort and Chukchi seas, Odum said. But in that time, the company has faced regulatory and legal hurdles and so far hasn't drilled a single exploratory well, Odum said.

A STACK OF PERMITS

He offered in written testimony submitted to the House Committee on Natural Resources that Congress should consider establishing a pilot office in Alaska to coordinate the regulatory activities of all the federal agencies that address energy in Alaska. They can "share resources and work together on studies, permits and other activities regarding these projects," Odum suggested.

David Smith, a spokesman for the Minerals Management Service, which is the main Interior Department agency overseeing offshore drilling, had no direct comment on Odum's remarks. Smith did say, however, that there are "a large number of permits that companies must get through every phase of energy exploration and development."

"The sheer number of permits can be challenging," he said. "It's very important when we're working with other government agencies, one of the things we really have to look at is environmental protection. It's a balance we certainly try to achieve."

Earlier this month, Interior Secretary Ken Salazar slowed down a last-minute Bush administration plan to expand offshore drilling -- the topic also was raised at today's hearing. Salazar slowed leases down by six months any oil and gas leasing in the nation's outer continental shelf and called for an additional 180 days of comment on the existing five-year drilling plan.

ASSESSING RISKS, BENEFITS

At the hearing, the top Republican on the committee, Rep. Doc Hastings, R-Wash., said he considered Salazar's slowdown the equivalent of a ban on drilling.

"Make no mistake, this action has precisely the same result as a moratorium," he said. "So let us call it what it truly is, a moratorium, not a delay."

But the chairman of the House Resources Committee, Rep. Nick Rahall, D-W.Va., said that offshore development is a "complex, multi-sided issue." That's why they've been holding a series of hearings on the various aspects of offshore drilling, Rahall said.

"I am not opposed to new drilling," he said, but added, "the American people deserve to understand the risks and benefits that expanded drilling on the outer continental shelf will bring."

Rep. Don Young, R-Alaska, one of the senior members of the committee, was not at Wednesday's hearing. Later, Young said he saw no need to attend the meeting.

"What would we learn in a hearing like that other than we ought to be drilling for oil?" Young said.



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