U.S. halts Arctic drilling until at least 2011

The Department of the Interior announced last Thursday that it is suspending all offshore drilling, including drilling in the Arctic, until at least 2011. The press release stated,

“The Department will make decisions about potential future lease sales in Alaska in the 2012-2017 OCS program based on public input, scientific analysis, and the results of on-going investigations and reviews into the BP oil spill.”

This decision means that Shell’s plans to begin drilling five exploratory wells this summer in the Chukchi and Beaufort Seas have been put on ice until at least next summer. Shell had tried to convince the administration of the safety of its drilling plans, noting that it would be drilling in only 150 feet of water compared to the 5,000 feet of water Deepwater Horizon had to go through to reach the seafloor. However, its efforts came to no avail. Shell paid $2.1 billion for the leases in 2008, which it purchased during the Bush Administration. Even if drilling does ever get underway in the Arctic, it will likely come under stricter controls and a harsher public eye.

Representative Don Young (R-AK) rebuked the move, condemning it as an “emotional decision” which is “the worst economic decision the Administration has made.”

“The kind of event that happened in the gulf, while tragic, is so uncommon. It is akin to an American jetliner crashing. If a plane goes down, we don’t stop flying.”

Senator Mark Begich (D-AK) also came out against the suspension, albeit somewhat less colorfully. He observed,

“I am frustrated that this decision by the Obama Administration to halt offshore development for a year will cause more delays and higher costs for domestic oil and gas production to meet the nation’s energy needs.”

Left unmentioned by Begich are the enormous costs wrought by oil spills. The Deepwater Horizon Industry has already cost $1.6 billion, and the clean-up effort is nowhere near over. Plus, the five oil wells Shell was supposed to drill in Alaska this summer would have been exploratory, meaning that the oil would not have been part of the supply stream just yet, and therefore would not have lowered the price at the pump.

The support of Alaska’s congressional delegation for the oil industry is unsurprising. The Alaska Permanent Fund receives 90% of its income from the petroleum industry, yet the Trans-Alaska Pipeline is only operating at 1/3 capacity. Alaskan officials had hoped that offshore drilling would fill the pipeline with oil and the state coffers with dollars. Ironically, 800 miles of the pipeline were just shut down for three days due to an oil spill of thousands of barrels during a scheduled maintenance. Fortunately, all of the oil was captured by an 2.3 million gallon storage tank, which can contain overflow. This incident further underscores the risks involved with any type of oil drilling, whether offshore or onshore, and the need for safety mechanisms.

Unlike Alaskan politicians, Native American groups in Alaska came out in favor of the decision. Two weeks ago, the Inupiat Community of the Arctic Slope a sent delegation to Washington, D.C. to meet with congressional officials and petition against offshore drilling. The president of the Inupiat Community, George Edwardson, said,

“If you want to know what I think about Shell’s plans to drill in the Arctic, look at the Gulf of Mexico. There’s no ice there and they can’t even clean up the oil.”

Drilling in other Arctic states

Canadians are also concerned about offshore drilling. Craig Stewart, director of the Arctic Program of World Wildlife Fund Canada, remarked in an interview with the Toronto Star that an oil spill in the Arctic would be disastrous, as no more than five percent of the oil could be contained. This is because in the Arctic, “we cannot clean up oil that flows under ice, and in the North Atlantic the rough seas would make it virtually impossible to contain the oil before it spread.”

Arctic drilling is also a major political issue in Norway, where the government will make a decision on whether to open up an area near the Lofoten Islands to exploration this fall. Prime Minister Jens Stoltenberg told the Financial Times,

“The oil spill in the Gulf of Mexico will be one of many pieces of information we will use when we are considering whether to move forward or not on the question of opening these areas to oil exploration.”

Already, Norway has just moved to ban deepwater drilling, the first country to do so in light of the Deepwater Horizon disaster. Terje Riis-Johansen, Minister of Petroleum and Energy stated,

“It is not appropriate for me to allow drilling in any new licenses in deep water areas until we have good knowledge of what has happened with the Deepwater Horizon and what this means for our regulations.”

Sparks could fly between Stoltenberg’s government and the Norwegian Petroleum Directorate, which does not want to halt deepwater drilling, which has been occuring off the coast of Norway for years. Bente Nyland, head of the NPD, said,

“It is not necessarily the water depth that is the main issue. There are other issues such as the depth of the reservoir, which is fairly deep in the Gulf of Mexico and shallower below the seabed in Norway.”

The tensions within Norwegian government are reflective of wider societal tensions over oil drilling in Norway, which has had to renconcile the industry with its identity as an environmentally conscientious nation since the discovery of oil in 1971.

News links

“Government puts Shell’s Arctic drilling plans on hold,” Indian Country Today

“Arctic Ocean drilling decision panned, praised,” Associated Press

“Alaska tribe asks government to suspend Arctic oil drilling,” Wall Street Journal

“U.S. to suspend new exploratory drilling in the Arctic,” Los Angeles Times

“Norway bans deepwater oil drilling,” Financial Times

“Norway directorate sees no reason to stop deepwater drilling,” BusinessWeek

“Oil industry vital to Alaska,” Anchorage Daily News