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Shell to receive US Government backing to resume Arctic exploration

23 March 2015

The US government is expected this week to give the go-ahead to controversial plans by Shell to restart drilling for oil in the Arctic. Sally Jewell, the Interior Secretary, will make a formal statement backing the decision as soon as March 25, the earliest point at which her department can confirm an approval given last month by the Bureau of Ocean Energy Management (BOEM).

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This is expected to spark protests from environmentalists who have campaigned against proposed exploration by the Anglo-Dutch group in the Chukchi and Beaufort seas off Alaska.
The US Interior Department had been forced to replay the decision-making process after a US federal court ruled last year, in a case brought by environmental groups, that the government had made mistakes in assessing the environmental risks in the drilling programme.

However, the BOEM, an arm of Jewell’s department, has backed the drilling after going through the process again, despite revealing in its Environmental Impact Statement “there is a 75% chance of one or more large spills” occurring.

According to the Guardian, Professor Robert Bea of the University of California in Berkeley, who made a special study of the Deepwater Horizon accident, has raised new concerns that the recent slump in oil prices could compromise safety across the industry as oil producers strive to cut costs. Bea, who has worked as a consultant to BP and Shell, told the Guardian:
“We should all be concerned about trade offs between production and protection ... With the significant reduction in the price for oil, there are equally significant pressures to reduce costs so that acceptable profitability can be maintained.”

Bea was brought in by Shell in 2004 to review how the group had assessed the risks associated with the proposed drilling in the Chukchi Sea. “At the end of the week’s discussions, we agreed to disagree,” he said.

Shell declined to comment on the prospective Arctic go-ahead but has previously said a decision on whether to start drilling again this summer would depend on a number of factors including regulatory and legal certainty.

Ben van Beurden, the chief executive, told a recent financial results conference that he was keen to proceed: “We have retained very significant capability to be ready this year to go ahead. So will we go ahead? Yes, if we can.”

On the issue of safety a spokesman for the company said: “We’ve said clearly that our plans must meet our own high bar as well as the one set by US regulators. Both have taken unprecedented measures to ensure offshore operations and contingency plans in the US Arctic are second to none.”

Shell was forced to halt operations in Arctic the middle of 2012 after the failure of a key piece of safety equipment that would be used to tackle oil spills. The situation for the company became worse when the drilling rig it was using, the Kulluk, ran aground after it was being towed back to port.


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