Shutting Down Offshore Drilling in the Arctic

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While the White House, Congress and the oil industry fight over the controversial deepwater drilling moratorium, a federal judge quietly made a significant decision on the next frontier of offshore oil and gas exploration: the Arctic seas. Yesterday U.S. District judge Ralph Beistline blocked energy companies from developing oil and gas leases worth billions of dollars in the Chukchi Sea in northwest Alaska. Beistline ruled that the agency formerly known as the Minerals Management Service had failed to properly assess the environmental impact of natural gas development on the region—even though there are trillions of cubic ft. of natural gas in Alaska’s offshore deposits and energy companies who bid on the leases like Shell have talked about their desire to develop gas. (The $2.7 billion, 2.76 million acre leases were sold in February 2008 under former President George W. Bush, despite fierce opposition from environmentalists and some Alaskan native groups—and were kept active under President Obama.) Though Beistline didn’t invalidate the original lease sales, as some environmental groups had hoped, the ruling stops all activity under the lease and requires the government to perform additional environmental reviews. “This ruling acknowledges the lack of information that [MMS] had about what drilling could do to the Chukchi Sea,” says Layla Hughes, the senior program officer for Arctic oil and gas policy at the World Wildlife Fund (WWF). “It’s pretty amazing the way this turned out.”

Indeed—Alaskan courts are traditionally about as pro-oil as you can get, much like the state government itself, which derives a 90% of its revenue from oil and gas royalties, so a defeat there would have been expected for greens. But the MMS—shockingly—couldn’t even perform the minimum level of environmental assessment needed on the oil and gas leases, and it will now have to take another crack at it. Companies like Shell that were planning on some early development activities—like seismic testing around offshore oil wells—will have to hold off for now. And the Alaskan Native activists who have fought offshore exploration for years because of fears about what drilling could do to their way of life were able to savor a rare victory, as Caroline Cannon, president of the Native village of Port Hope in northwest Alaska, told the AP:

So little is known about our Arctic Ocean. Scientifically, they have not enough data. That’s the message we brought at the table. And it’s so good that we’re on the same page, that the world has heard us, in a sense. That we’re visible and not on the corner of the back page. That we exist and we count.

While the BP oil spill in the Gulf wasn’t a part of this case, the shadow of that catastrophe certainly hangs over Arctic drilling. It’s self-evident that the oil industry has struggled—to put it kindly—to deal with a blown well in the Gulf of Mexico, where the water is warm, the weather (relatively) clear and there is a huge network of support vessels and experts already in theater. In the distant Arctic seas, where the water is frozen much of the year, none of that is true. (As another WWF staffer remarked once, an oil spill in the Gulf is like having a heart attack in the middle of a hospital, while an oil spill in the Arctic would be like…having a heart attack in the middle of the Arctic.) “If you cannot clean up the spill in the calm, flat seas of the Gulf, don’t call me if you have a spill in the broken sea ice of the Arctic Ocean,” says Richard Charter, senior policy adviser for marine programs at the Defenders of Wildlife. “It would be ecological suicide.”

The ball is now in the court of Interior Secretary Ken Salazar, who issued a memorandum in May delaying exploratory drilling in the Arctic until 2011. Environmentalists will keep pushing the White House to keep the Arctic off-limits for drilling—and you can expect the oil industry, which is extremely powerful in Alaska, to push back. The Last Frontier state may end up being the last frontier for the oil industry, and they won’t give up without a fight, as I learned in a trip to Alaska last summer:

There’s a lot more crude out there. An estimated 27 billion barrels of oil are believed to lie beneath the state’s southwestern Bering Sea and the ice-choked Chukchi and Beaufort Seas off Alaska’s North Slope. But are Americans willing to pay the price to get it? Drilling offshore in these wild waters poses an environmental risk. A loose coalition — greens who fear for endangered species like the polar bear, fishermen who worry about what another major spill could do their livelihood, Alaskan natives defending their traditional lifestyle — is fighting to keep offshore oil off-limits. It’s a battle, fought from the tundra of the North Slope to the federal courts of Washington, for the future of the state — and with 13% of the world’s remaining undiscovered oil believed to lie in Arctic regions, it’s a battle that will likely be waged again and again in the decades ahead as the global economy moves from an era of abundant oil to one of relative scarcity. “We know from the legacy of the Exxon Valdez what’s at stake here,” says Rick Steiner, a marine conservationist with the University of Alaska. “The Arctic is going to be a very interesting place from now on in.”