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U.S. seeks more data from Shell on Arctic Ocean drilling plans

WASHINGTON — Saying there are new safety concerns raised by the April 20 explosion of an oil drilling rig in the Gulf of Mexico, the Interior Department has given Shell Oil until May 18 to provide more information about the company's exploratory drilling plans in the Arctic Ocean.

The department also said the Dutch oil giant will fall under the temporary halt to all pending U.S. offshore drilling proposals, putting the company's summer Arctic drilling plans in limbo.

"The recent and ongoing tragedy of the Deepwater Horizon incident in the Gulf of Mexico highlights the importance of taking every step necessary to ensure the safety of all offshore drilling operations," Elizabeth Birnbaum, the director of the Minerals Management Service, wrote Thursday to Marvin Odum, the head of Shell's North American division.

The agency wants to know what sort of additional safety procedures Shell is proposing to undertake in light of the gulf explosion, which left workers 11 dead and 210,000 gallons of oil leaking each day from the downed BP rig.

Interior Secretary Ken Salazar made the announcement about Shell's Arctic plans late Thursday. There will be no new offshore drilling until the Interior Department completes the safety review process requested by President Barack Obama, Salazar said. The department is required to deliver the report to the president by May 28, 2010.

Salazar also said specifically that the MMS will not make a final decision on Shell's permits for exploratory wells until the Interior Department's report to Obama has been submitted and evaluated.

Right now, the company is moving forward with its plans to drill this summer, until someone says it can't.

Shell, hoping to put distance between the oil gushing from the BP rig and its own pending Arctic project, sent a top executive and engineer to Capitol Hill this week to convince decision-makers that the company still be allowed to drill exploratory wells off Alaska's northern coast.

The company's lobbying came as the Obama administration canceled planned offshore lease sales in Virginia and environmental groups went to court to delay Shell's plans to drill exploratory wells this summer in the Beaufort and Chukchi seas.

Shell's aim in Washington was to reassure regulators and stakeholders that the company "can operate safely and responsibility here in Alaska," said the company's Alaska spokesman, Curtis Smith.

As they've made the rounds on Capitol Hill, the Shell officials have been emphasizing the technical differences in drilling in 200 or fewer feet of water and the 5,000-foot-deep Gulf of Mexico operations.

"We think it's an important contrast to highlight the difference in drilling regimes in Alaska and the deepwater Gulf of Mexico," Smith said. "Shell is a pioneer also in the deepwater Gulf of Mexico, so I don't mean to disparage that as an unsafe drilling regime at all, but they're just different."

The company's oil response experts joined the vice president of the Alaska operation, Pete Slaiby, and one of their top engineers, Charlie Williams. The Shell team met with staffers who work on the Senate Energy and Natural Resources Committee for Alaska Sen. Lisa Murkowski, the panel's ranking Republican, and with staffers for Sen. Mark Begich, D-Alaska, and Rep. Don Young, R-Alaska.

Smith couldn't confirm whether anyone with Shell met with officials within the White House or the Interior Department; however, they have met with officials with the Minerals Management Service's Alaska office, he said. The Interior Department also has not said whether company officials met with anyone at the federal agency in Washington.

The events in the Gulf of Mexico have given them reason to "double- and triple-check what we already believe is a very robust drilling plan to see if we can make it better," Smith said.

Shell in 2008 spent $2.1 billion on the Arctic leases in the Beaufort and Chukchi seas. The Minerals Management Service estimates that the two Arctic seas hold up to 19 billion barrels of oil and up to 74 trillion cubic feet of natural gas, making their resource potential comparable to the known oil and gas from the North Slope's onshore fields.

In early April, the White House announced that it supports development of some oil and gas leases in Arctic waters off Alaska's coast but won't allow drilling in federal waters near Bristol Bay. Following the accident in the gulf, the Obama administration announced Thursday it would suspend any additional offshore oil lease sales while it investigates what new technology is needed to prevent another such deadly blowout.

Shell is waiting on the final approval from MMS as well as an appeal of the Environmental Protection Agency's decision to issue air permits for its exploratory vessels and rigs. It's also awaiting the outcome of a last-minute federal court challenge by environmental groups.


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