Shell receives air permits for Chukchi drilling

Posted: Friday, April 02, 2010

ANCHORAGE - Shell Oil has crossed another hurdle in its plans to drill three exploratory petroleum wells in the Arctic Ocean.

The Environmental Protection Agency announced Thursday it had approved a clean air permit for Shell to operate its drilling ship in the Chukchi Sea off Alaska's northwest coast.

The permit requires the Frontier Discover to burn ultra low-sulfur diesel fuel. That and other conditions, including restrictions on operating hours, will reduce particulate emissions by 72 percent and sulfur dioxide emissions by 99 percent, from 181 tons per year to 2 tons, said Janis Hastings, deputy director of EPA's air quality program.

Short-term exposures to sulfur dioxide is linked to adverse respiratory effects and increased asthma symptoms.

The fuel requirement also covers Shell's support vessels when they operate within 25 miles of the drill ship.

Shell wants to drill three exploratory wells on the Arctic Ocean acreage it leased in a 2008 sale. The company also awaits an air quality permit for proposed drilling in the Beaufort Sea; a decision will be made later this month, Hastings said.

The announcement came one day after President Barack Obama and Interior Secretary Ken Salazar announced a revised outer continental shelf leasing program.

The revision was in part a response to a lawsuit by three environmental groups and an Inupiat Eskimo community. A federal appeals court in Washington, D.C., a year ago agreed that the Interior Department did not properly study the environmental impact of expanding oil and gas drilling off Alaska's coast before issuing its five-year leasing program.

Salazar on Wednesday announced the agency had considered nearly 50 studies for its revised leasing program. For the Chukchi and Beaufort seas, Salazar said, lease sales would be suspended for at least two years so that additional scientific studies could be conducted and because the estimated benefit is outweighed by potential environmental damage.

However, he retained the 2008 Chukchi lease sale, in which Shell paid $2.1 billion for leases. Information from lease holders' scientific studies, including whether an oil spill can be cleaned up in broken ice, will help him determine whether additional lease sales are needed in the 2012-2017 lease program, Salazar said.

Shell spokesman Curtis Smith said Thursday delivery of the final Chukchi Sea air permit on the heels of Wednesday's news that the company would continue to have access to offshore acreage obtained in 2008 was excellent news. However, he noted the permit must be listed for 30 days before it becomes usable, and it could be appealed to the Environmental Appeals Board.

Sen. Mark Begich, D-Alaska, called the EPA's approval great news for the state.

"I'm hopeful we're poised for a renaissance in Alaska's oil patch, with this permit for Chukchi development and the Obama administration's support for OCS development," Begich said.

The Minerals Management Service estimates the Chukchi could hold recoverable reserves of 15 billion barrels of oil and 77 trillion cubic feet of natural gas.

Brendan Cummings, an attorney for the Center for Biological Diversity, called the air permit "highly problematic and likely illegal."

"While Shell's drilling operations would contribute significant amounts of conventional pollutants to the atmosphere, perhaps our biggest concern is that large amounts of black carbon, which directly contributes to Arctic warming, will be released, yet EPA failed to perform any real analysis of such impacts," he said.

The Clean Air Act requires EPA to impose conditions related to greenhouse gas emissions, he said, and Shell's drilling will likely contribute upward of 90,000 tons of carbon dioxide to the atmosphere.

"There was no analysis, much less attempt at regulation of this pollutant," he said.



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