Federal officials will study how a "very large oil spill" would affect the ocean off Alaska's northwest coast as part of a court-ordered environmental review for a 2008 offshore petroleum lease sale that garnered billions of dollars for federal coffers.
The decision by the Bureau of Ocean Energy Management, Regulation and Enforcement could further delay company drilling plans and potentially affects thousands of jobs, future energy security and the economic stimulus that would result from offshore development, said Curtis Smith, a spokesman for Shell Oil, the major lease holder in the Chukchi Sea.
The Chukchi lease sale in February 2008 brought in nearly $2.7 billion, including $2.1 billion from a subsidiary of Shell.
No exploratory wells have been drilled. Drilling has been held up by court challenges and a lack of permits, frustrating company officials and the state of Alaska, whose economic future depends on finding additional sources of oil for the trans-Alaska pipeline.
But U.S. District Court Judge Ralph Beistline of Anchorage in July ruled that the federal government failed to follow environmental law before it sold the leases in the Chukchi, which is covered much of the year by ice and is home to polar bears, walrus, ice seals and endangered whales.
Beistline ordered the Interior Department to analyze the environmental impact of natural gas development and determine whether environmental information it acknowledged was missing was essential for the sale to go forward.
In a court filing in Anchorage, a bureau official said it would be appropriate for the federal agency to update its spill risk assessment in the Chukchi Sea as part of its environmental review. Agency officials said the analysis will be completed by late May, followed by a 45-day public comment period. It expects a final revised environmental review by October.
Shell last month announced it would drop plans for this year to drill in the Beaufort Sea off Alaska's north coast and concentrate on obtaining permits for the 2012 season. The company said the final driver in the decision was its failure to be issued an air permit by the Environmental Protection Agency. The agency's review board granted an appeal because of limited agency analysis regarding the effect of emissions from drilling ships and support vessels.
The bureau's decision presents additional challenges and Smith said the company is investigating the potential effects on its 2012 plans.
"We already took into account worst case discharge when we built a world class Arctic oil spill response fleet for Alaska, so it's hard to imagine raising the bar even higher than we already have in that arena," Smith said.
The company is concerned that the new extended schedule for the spill analysis is inconsistent with the court's narrow ruling, he said
"What is clear, is that the mounting examples of regulatory delay and uncertainty place ever increasing pressure on the possibility of developing the Alaskan OCS," he said.
Environmental groups had mixed reaction to the agency announcement. Leah Donahey of the Alaska Wilderness League, a plaintiff in the lawsuit, said the group is glad that the bureau is applying lessons learned from the Deepwater Horizon disaster to the Arctic Ocean.
She said a spill in Norway shows that the Arctic has its own challenges.
"There is no known way to clean up a spill in the Arctic's icy, extreme conditions," she said.
Attorney Mike LeVine of Oceana called spill analysis a good first step but does not address the court's concern that the agency failed to outline the basic environmental information missing from its first review. The agency also does not say it whether the missing information is necessary.
"BOEMRE cannot fix this problem by May," he said. "Without a serious commitment to getting the basic science needed to make good decisions, the agency is just following the failed lease-at-all-costs approach. We must let science and preparedness, not politics, guide us in the Arctic."