ALASKA: Shell's Alaska Drilling Project Halted by Court

Royal Dutch Shell Plc's plan to drill the deepest offshore Alaskan oil well was halted by a court to allow consideration of the project's effect on bowhead whales and other animals.

A federal appeals court in San Francisco yesterday ordered the company's vessels to stop operating pending resolution of a request by environmental groups and Eskimo villages to require more research on their impact on marine wildlife. The court put on hold the U.S. Minerals Management Service's approval of the plan and scheduled an Aug. 14 hearing.

``Vessels currently located in the Beaufort and Chuckchi Seas shall cease all operations,'' the U.S. Court of Appeals said. The ships ``need not depart the areas,'' the court said.

Shell, the world's second-largest oil company, has said it invested $200 million in the drilling program. It studied the effects on sea mammals and developed a plan to respond to oil spills, the company said. Further research may cause a significant delay or prevent drilling altogether in 2007, Shell said in court papers.

The ruling may affect Shells plans for drilling this summer, said Curtis Smith, a company spokesman.

``We will have to work within the window we have,'' Smith said in an e-mail. ``Between the time we get all the necessary permits and when the ice arrives, we have to do our best to explore Beaufort.''
Exxon Mobil Corp. is the world's largest oil company.

Not Final
The Beaufort Sea is part of the Arctic Ocean north of Alaska and the Northwest Territories. The North Slope Borough, which includes eight Inupiat Eskimo villages in northern Alaska, the Alaska Wilderness League and other conservation groups asked the Interior Department's Board of Appeals to block Shell's exploration in April. The board asked the appeals court to review the issue in May.

``It's not a final decision but it does show the court is looking at it deeply,'' said Peter Van Tuyn, a lawyer representing the conservation groups. ``To have the court's level of interest to ask for oral argument is very good for us.''

In February, the Minerals Management Service, a U.S. Interior Department agency charged with regulating oil development in federal waters, said drilling wouldn't harm bowhead whales and Shell is prepared to respond to oil spills.

The federal agency ``diligently performs all appropriate environmental reviews and meets all requirements when preparing for any offshore leasing activity,'' Robin Cacy, a spokeswoman in Anchorage, Alaska, said in an e-mailed statement.

Shell's Plans
In January, Shell said it planned to expand its search for oil by drilling the deepest offshore Alaskan well.

Shell, which abandoned U.S. arctic exploration 21 years ago, plans to drill one well to 14,000 feet (4,267 meters) beneath the sea floor, which would exceed the deepest well drilled in Alaskan waters by 3,000 feet. Two additional wells will be 7,000 feet deep.

The case is Alaska Wilderness League v. Kempthorne, 07- 71457, U.S. Court of Appeals for the Ninth Circuit (San Francisco).

Via: Bloomberg
by Karen Gullo & Tony Hopfinger