Royal Dutch Shell PLC is a step closer to drilling in the Chukchi Sea off Alaska after authorities released a report detailing the oil potential and environmental impact of the project, which until now has been fraught with mishaps and pushback from conservation groups. The draft study, a 655-page report released Friday by the Bureau of Ocean Energy Management, estimates Shell could produce as much as 4.3 billion barrels of oil from the area, higher than original estimates of just 1 billion. But it also details a 75 percent chance of an oil spill, which has spurred on environmental groups who were already opposed to the project.
“In response to a federal court order, the Bureau of Ocean Energy Management (BOEM) today released the Draft Supplemental Environmental Impact Statement (SEIS) for Chukchi Sea Outer Continental Shelf Oil and Gas Lease Sale 193,” the agency said in a press release. “BOEM prepared the draft SEIS using the best available science, and working in close consultation with Alaska Native tribes, federal partner agencies, state and local governments, stakeholders and the public.”
Shell paid $2.1 billion to the U.S. government in 2008 to lease the area. Since then, Europe’s biggest oil company has spent $6 billion exploring the region, but progress hasn’t been easy.
The latest environmental report is actually the second rewrite ordered by the government. In 2010, U.S. District Judge Ralph Beistline ruled an earlier analysis, done by the Minerals Management Service, was flawed, and ordered a new investigation, the Alaska Dispatch News reported.
In 2012 one of its rigs was grounded and a spill-containment system was damaged, which slowed operations. The company has also been sued by activists who say these problems indicate the company wasn’t ready to drill responsibly, Bloomberg reported.
“The third time is not the charm,” Susan Murray, Deputy Vice President of Pacific at conservation group Oceana, said in a statement. “The American people deserve more than another attempt to justify a poorly planned and evaluated lease sale. As Shell has demonstrated, companies are not ready to operate safely in the Arctic Ocean. Our government has no business selling leases there.”
The company Thursday said it will follow through with plans to drill, but is also asking the U.S. government for an extension on its lease, which originally required that drilling begin in 2017.
“We are planning and hoping to drill next year but we have not taken a decision to do so because it will depend on ongoing litigation,” Shell Chief Financial Officer Simon Henry said on a conference call from London, according to Bloomberg.