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Court to MMS: Reconsider Shell's Beaufort Sea Drilling Plan

The U.S. Court of Appeals for the Ninth Circuit on Thursday vacated the Minerals Management Service's (MMS) approval of Shell Offshore Inc.'s (SOI) plans to explore for oil and natural gas in the Beaufort Sea north of Alaska and Canada.

In a 62-page opinion the court remanded Shell's plan to the Interior Department's MMS, telling the agency to conduct the "hard look" analysis required by the National Environmental Policy Act (NEPA).

Plaintiffs in the case, including the Alaska Wilderness League, Natural Resources Defense Council, Pacific Environment and Resources Council, Center for Biological Diversity, Sierra Club, North Slope Borough and Alaska Eskimo Whaling Commission had challenged the MMS action, alleging that the agency failed to fully consider the impact of drilling on the people and wildlife of the Beaufort Sea region as required by NEPA and the Outer Continental Shelf Lands Act. They also argued that MMS erred by failing to prepare an environmental impact statement for the proposed exploration activities, which they said carried potentially significant harmful effects on the environment.

Shell has invested $84 million to acquire Outer Continental Shelf leases in the Beaufort Sea, according to company spokeswoman Robin Lebovitz. "Additionally, Shell has invested heavily in equipment and vessels, in scientific and environmental data gathering, and in community outreach," Lebovitz said.

MMS said it was "disappointed by the ruling," which it said it would review closely.

"MMS completed an extensive environmental assessment of the Shell exploration proposal, supported by a 1,596-page environmental impact statement, along with other environmental reviews," said an MMS spokesman. "These extensively analyzed potential impacts to wildlife, including the bowhead whale and subsistence activities. We believe that MMS did conduct the required 'hard look' to see if an environmental impact statement was necessary."

SOI's Beaufort Sea exploration plans have met legal resistance from the same group of plaintiffs for some time. Following approval by MMS in February 2007, SOI was scheduled to begin drilling some exploration wells on the Sivulliq prospect in August 2007. However, area stakeholders and environmental groups challenged Shell in court, and the Ninth Circuit Court of Appeals called a halt to the drilling pending a ruling (see NGI, July 23). Less than a month later the court issued an indefinite ban on drilling so that it could decide whether the MMS properly assessed the potential for environmental damage before an exploration permit was issued to SOI (see NGI, Aug. 20, 2007).

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