The U.S. Department of Interior (DOI) filed its record of decision (ROD) on a 2008 federal oil and natural gas lease sale in the Chukchi Sea offshore Alaska, affirming the sale over the objections of environmentalist challengers.

The decision affirms the sale of 487 leases covering 2.8 million acres under Lease Sale 193. In that sale Shell Oil Co. paid $2.1 billion for leases. However, the sale was challenged by environmentalist groups, which maintained that the Minerals Management Service [predecessor to today's Bureau of Ocean Energy Management (BOEM)] failed to follow the law on environmental requirements.

"The Department of Interior's positive record of decision affirms Lease Sale 193 and clears the way for BOEM to conclude its review of our Chukchi Sea plan of exploration," Shell said in a statement. "We believe that plan is technically and scientifically sound, and we look forward to begin exploring this critical part of our Alaska portfolio in 2012."

The ROD affirms the lease sale but does not grant approval for operations to begin in the Chukchi Sea. Earthjustice represented the parties opposing the sale.

"We are reviewing the decision and will assess our course of action in light of that review," Earthjustice attorney Erik Grafe told NGI. "Should we choose to challenge the adequacy of the remand, we would file pleadings first with the district court, which has set a schedule for such potential filings that would have the issue fully submitted to the court by Dec. 21. At the conclusion of those proceedings, we would have open to us the option of appealing any adverse ruling to the Ninth Circuit Court of Appeals."

Under the ROD all of the leases are subject to a series of conditions to mitigate operational and environmental risks, including protection of biological resources; orientation programs to familiarize personnel with environmental, social and cultural issues; environmental requirements regarding the placement of pipelines; precautionary action to mitigate potential oil spill impacts; and measures to minimize the effects to Spectacled and Steller's eiders, BOEM said.

Lease Sale 193, held in February 2008, was contested in U.S. District Court. In 2010 the court remanded the sale to the bureau to address specific concerns related to the National Environmental Policy Act (NEPA) analysis conducted prior to the sale. The then-Bureau of Ocean Energy Management, Regulation and Enforcement completed a supplemental environmental impact statement (SEIS) last August.

The SEIS, in accordance with the court order, provides additional analysis to supplement the NEPA review originally completed in 2007 for Lease Sale 193, BOEM said. The bureau analyzed the potential impacts of natural gas development and further reviewed the relevance and importance of information identified as missing or unavailable in the 2007 analysis. The SEIS also analyzed the environmental impacts of a hypothetical "very large oil spill scenario" in light of the 2010 Deepwater Horizon well blowout in the Gulf of Mexico.

BOEM has also required specific mitigation measures for the corridor of leases closest to the coastline, including a corridor 52 miles from the shore in which no lease activity will take place, a site-specific monitoring program to assess behavioral effects on a number of marine mammals and polar bears, and conflict-avoidance mechanisms to protect subsistence harvesting activities, it said.

However, Grafe sees the ROD as a failing of the Obama administration to live up to promises.

"The Obama administration said it would make decisions in the Arctic based on sound science, but today it flunked the test," Grafe said. "Its best scientists say that gaps in baseline data about whales, polar bears, walrus, fish and nearly every other species in the Arctic Ocean mean there is no foundation for key Arctic decisions. But the administration...decided to open the Chukchi Sea to offshore drilling without first obtaining these basics, putting at risk the wildlife and coastal communities of the region. In opening the ice-filled and remote Chukchi Sea to oil drilling without conducting further inquiry into missing data, the administration has squandered a golden opportunity to start making defensible, science-based decisions in the Arctic Ocean."

Commenting on DOI's regulatory policies, Pete Slaiby, vice president of Shell Alaska, said the industry welcomed the department's decision to approve additional leases in the Arctic region. Referring to leases in onshore areas in the National Petroleum Reserve-Alaska (NPRA), he said, "It is welcomed by the industry; however, it is in a challenged area. Areas in [the NPRA] have become increasingly difficult to permit...We have about 35 permits that we need to obtain. All of these permits will ultimately be litigated and are indeed being litigated for 2012. [But] we have learned a lot in how to operate within the system and to put together a robust program."

Slaiby spoke Tuesday at the United States Energy Association's Annual Energy Supply Forum at the National Press Club in Washington, DC.

The Environmental Protection Agency recently issued the final air quality permits necessary for Shell Oil Co. to conduct oil and gas exploration drilling in Alaska's Arctic region (see Daily GPI, Sept. 21).

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