Shell scraps bid to drill off Alaska’s coast this year

Shell Oil announced Thursday that it's abandoning efforts to drill in icy waters off Alaska’s northern coast this year, a decision that prompted Alaska's senators to accuse the Obama administration of blocking access to large domestic supplies.

The company’s plans to drill in Arctic waters have long been under attack from environmental groups. The Interior Department, after the BP oil spill, halted the oil giant’s plan to drill in 2010.

Now the company – which is awaiting air quality permits and Interior’s permission – is throwing in the towel on 2011 too. The Houston Chronicle reports:

Shell CEO Peter Voser confirmed the work will now be postponed until at least 2012, as the company works to obtain necessary environmental permits and convince federal regulators it is prepared to contain an out of control well in remote, icy waters.

“We have been working rigorously for the past five years to meet and exceed all the regulatory and permitting requirements in Alaska. However, despite our investment in acreage and technology and our work with stakeholders, we have not been able to drill a single exploration well,” Voser said in an earnings call this morning. “Despite our best efforts, critical permits continue to be delayed, and the timeline for getting these permits is still uncertain.”

Sen. Lisa Murkowski (R-Alaska), the top Republican on the Energy and Natural Resources Committee, criticized the Environmental Protection Agency, which handles air quality permitting.

“The EPA’s refusal, or simple inability, to issue key permits in a timely fashion is indefensible,” Murkowski said in a statement. “Shell has now invested roughly $4 billion and five years attempting to get the permits it needs, without success.”

“New supplies of oil are essential to keeping the trans-Alaska pipeline in operation,” Murkowski added. “While my home state stands ready to do its part to keep energy affordable and to right the economy, the federal government continues to stand in our way.”

Sen. Mark Begich (D-Alaska) is irked at the Obama administration, too. 

“I put the blame for this squarely on the EPA and the Obama Administration who have taken virtually every opportunity to block responsible development of Alaska’s resources," he said in a statement, alleging the decision means the loss of 800 jobs and other "indirect" employment.

But the delay is a victory — at least for now — for environmental groups that have waged legal and PR campaigns against the drilling.

“Shell Oil’s decision to forego any plans to drill in America’s Arctic Ocean in 2011 just reinforces what we have been saying all along, that they are not ready to drill in the Arctic’s uncharted waters,” said Cindy Shogan, executive director of the Alaska Wilderness League, in a statement Thursday.

“This decision removes artificial pressure that Shell has been putting on the government to rush decisions on drilling in Arctic waters – and gives them time to focus on the science and oil spill response technology that has been lacking for so long. The bottom line is that there is no known way to clean up an oil spill in the Arctic’s conditions and too little is known about the Arctic’s marine environment. These things need to be addressed before decisions can be made about whether development can proceed in both the Chukchi and the Beaufort Seas.”

This post was updated at 1:55 p.m.