US Appeals Court Blocks Shell Drilling in Arctic

US: August 16, 2007

LOS ANGELES - A US federal appeals court in San Francisco Wednesday upheld an order blocking Royal Dutch Shell Plc from exploratory drilling in the Beaufort Sea off Alaska's north coast.

"We are disappointed," said Shell in a press statement that added that no drilling will mean the loss of "hundreds of permanent jobs that would be created if Shell is successful in Alaska." The statement also said Shell's efforts to explore in Alaska will continue.

The ruling deals a serious blow to Shell's plan to drill up to four exploration wells during the brief Arctic summer to test a $44 million bet the company placed on the region in 2005.

Environmental groups, who say the area is also threatened by global warming, vowed to keep fighting Shell's drilling, which they say harms an area of the Arctic where endangered bowhead whales migrate.

"If polar bears are to survive as the Arctic melts in the state of global warming, we need to protect their critical habitat, not turn it into a polluted, industrial zone," said Brendan Cummings of the Center for Biological Diversity, one of the petitioners.

The ruling essentially says that a handful of environmental groups, Alaska Native groups and the North Slope Borough have merit in their arguments that the drilling could harm the environment.

This sets up proceedings for the same Ninth Circuit Court of Appeals to look into the matter more fully.

With December being the first chance for the three-judge panel to address the issue again, this shuts out Shell from drilling before the Beaufort Sea freezes for winter.

The three-judge panel ruled Wednesday that the groups challenging Shell "raised serious questions and demonstrated the balance of hardships tips sharply in their favor," according to the ruling.

The ruling upholds a July 19 hold on Shell's operations called until the ruling issued Wednesday.

Whaling and environmental groups said the US Department of Interior's Minerals Management Service did not study the possible negative impact of drilling fully when it approved Shell's drilling plans in February 2007.

Shell officials, on the other hand, say they believe they have met all requirements and can adequately safeguard from harming the Beaufort Sea and the North Slope.

"There are a number of different views from a wide range of stakeholders in regards to Shell's plan for exploration in Alaska," Shell spokeswoman Sarah Andreani said: Shell said it is in Alaska to stay.

"Alaska is a long-term commitment for Shell," the company's statement said. "Despite today's court decision, we see a bright future for Shell in Alaska."

Story by Bernie Woodall
REUTERS NEWS SERVICE