Arctic Drilling Suspended June 18, 2010 - 11:05 AM | by: Dan Springer The Obama Administration has done an about face on drilling for oil in the Arctic Ocean. Just days after its Justice Department defended Shell Oil's plan to drill five exploratory wells in the Chukchi and Beaufort Seas off the coast of Alaska, the Interior Department suspended the operation. President Obama has directed the United States Geological Survey to conduct further study to determine the potential impacts of a spill there and the company's ability to respond. Shell officials criticize the move as purely political in the wake of the disaster unfolding in the Gulf of Mexico.
The company points out the Arctic drilling would be in much shallower water than was being done by Deepwater Horizon in the Gulf. Shell's plan is to drill in 150 feet of water compared to the 5,000 feet overseen by British Petroleum.
What's at stake? The Minerals Management Service estimates the U.S. portion of the Arctic contains 27 billion barrels of oil. That's more than twice as much as has been produced on Alaska's North Slope over the last 30 years. In March when he announced offshore drilling plans, President Obama said the U.S. would be dependent on oil for the next 40 years. He said the domestic exploration would lessen the country's dependence on foreign oil as it transitions to cleaner sources of fuel.
Environmental groups hailed the decision to suspend deep water and Arctic drilling. The Center for Biological Diversity had sued unsuccessfully to block Shell's plans in the Beaufort and Chukchi Seas. Leaders say there is no technology to clean a major spill in the broken ice environment and any accident would be devastating to several species including the endangered polar bear.
Shell has paid $3.5 billion for more than 400 leases in the Chukchi and Beaufort Seas. The company successfully drilled 16 exploratory wells in the late 1980's but chose not to dive intro production for several reasons. The price of oil was low, the location is remote making it more costly than say the Gulf and the ice conditions do present challenges.
Now, Shell officials say they have 20 more years of experience in Arctic oil production. They are partners in rigs operating off the coasts of both Russia and Norway.
And then there's the jobs issue. Shell's summer drilling would have meant 400 jobs and full production could have added 35,000 jobs over the long term
