Federal agency releases revised environmental review of Arctic Ocean petroleum lease program

IndustriesAssociated Press

The federal Bureau of Ocean Energy Management on Friday released a revised environmental review of proposed petroleum development in Alaska's Chukchi Sea, a step that could lead to a resumption of Arctic Ocean drilling in 2015.

The document was immediately panned by environmental groups that have twice successfully sued to block drilling in the Chukchi Sea. They claim federal reviewers have seriously underestimated drilling's environmental effects in a remote, harsh environment that's home to polar bears, whales, walrus and other threatened species and Native Alaskans who depend on the ocean.

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Bureau of Ocean Energy Management Acting Director Walter Cruickshank said the document was released after "a robust and thorough process." It uses the best available data, including actual bidding data, to estimate the highest amount of anticipated production, the agency said.

Mike LeVine, an attorney for the environmentalist group Oceana, said it's the third time the government has tried to justify offering millions of acres of the remote Chukchi Sea to oil companies.

"The government should have more fairly evaluated the impacts of the sale before holding it, and companies should have more carefully weighed the risks to their investments before making them," he said in a prepared statement.

Pro-development U.S. Sen. Lisa Murkowski, R-Alaska, said the release of the revised environmental review was good news. She said she hoped it would satisfy court concerns. Alaska's offshore resources are an opportunity to improve America's energy security, create jobs and keep the trans-Alaska oil pipeline operating, Murkowski said.

"We're now getting down to the wire, and it's vital that there be no further delay," she said in a statement. "The leaseholders are under a very tight schedule and have to receive final approval for their drilling plans by early spring in order for there to be drilling next summer."

A federal appeals court in January ruled that the government prepared a flawed environmental review before selling $2.7 billion in Chukchi leases in 2008. The review was based on projected extraction of 1 billion barrels of oil. Environmental groups said development was likely to be far more widespread.

Royal Dutch Shell PLC was the leading bidder in 2008. The company spent $2.1 billion on Chukchi leases and has spent more than $5 billion on Arctic offshore development.

Shell in 2012 drilled pilot holes and performed other preliminary work in both the Chukchi and the Beaufort seas. The company experienced problems in the challenging Arctic conditions, culminating with the drill vessel Kulluk running aground near Kodiak as it was being towed across the Gulf of Alaska.

The company chose not to drill in 2013 or 2014. But it has prepared a revised drilling plan for 2015 if it is allowed to drill and chooses to do so.

LeVine said the supplemental review, in two volumes with nearly 960 pages, is flawed but indicates drilling cannot be done safely during the short summer open water drilling season.

The agency acknowledges that there is a 75 percent chance that one or more large oil spills of 42,000 gallons or more could occur if the leases are developed, LeVine said by email.

Environmental groups contend oil companies have never demonstrated they could clean up spills in ice-choked Arctic waters.

"I can't think of a riskier and more ill-suited place on Earth to drill for oil than the open Chukchi Sea," said Margaret Williams, managing director of Arctic programs for World Wildlife Fund. "If an accident were to occur in the Chukchi, it will be the wildlife and the people of coastal Alaska who will bear the burden."

The Nov. 7 publishing of the supplemental environmental review in the Federal Register kicks off a 45-day public comment period ending Dec. 22 that will include hearings in seven Alaska communities.