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Shell pulls the plug on summer drilling plans

By Lauren Maxwell 7:38 PM January 30, 2014

The oil company says a court decision doesn’t give them the “certainty” they need to proceed

ANCHORAGE - Shell Alaska said it is giving up on plans to drill for offshore oil in Alaska this summer. The company said a recent court decision has thrown a roadblock that is just too hard to get around.

The Ninth Circuit Court of Appeals considered a lawsuit that said lease sales in the Chukchi Sea should never have been permitted in the first place. Environmental groups alleged the federal government underestimated the risk that offshore drilling could pose when the leases were issued six years ago. Essentially, the court agreed.

Shell has already invested billions of dollars attempting to look for oil in Arctic waters. The company had recently submitted a new exploration plan to continue drilling in the Chukchi this summer.

Shell Alaska Vice President Pete Slaiby said it doesn’t make sense to spend more money going forward if the court decision will affect whether new permits are issued.

“With the court action, our ability to get the certainty we need about being able to drill in 2014 was severely eroded, “ Slaiby said. “It really makes a decision on not moving forward inevitable.”

The federal government hasn’t shut them down, but it could, especially if the courts insist on an entirely new review of environmental risks to drilling offshore.

That’s a process that could take months or even years.

Slaiby said the company is still communicating with the federal government about future permits. No decisions have been made about Shell’s offshore drilling plans in Alaska for the long-term, he said.

Both of Alaska’s U.S. senators, the governor and legislators in Juneau expressed their disappointment with Shell’s decision Thursday.

Gov. Sean Parnell said he worries about the message this might send to potential investors in any major development project in Alaska.

“We’re talking about eight years of effort, work with no results yet, with nothing to produce yet,” Parnell said.

For one lawmaker in particular, today’s news hit home. Rep. Bennie Nageak (Barrow) said people in his district were hoping for jobs and opportunity.

Native corporations on the slope would have played a big role in that, he said, by helping to develop the necessary infrastructure.

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