ANCHORAGE, Alaska - ConocoPhillips Alaska announced Wednesday it will not
drill in Arctic waters off Alaska's northwest shore in 2014.
Environmental groups hailed the decision and said the experience of Royal
Dutch Shell PLC in 2012 demonstrated that oil companies are not prepared
to drill in the fragile Arctic environment.
 ConocoPhillips said uncertainties of evolving federal regulatory
requirements are the reason for backing off. "While we are confident in
our own expertise and ability to safely conduct offshore Arctic
operations, we believe that more time is needed to ensure that all
regulatory stakeholders are aligned," said ConocoPhillips Alaska
President Trond-Erik Johansen in the prepared statement. It would not be
prudent to commit financial resources to preserving the option to drill
in 2014 at this time, the company said.
The company cited an Interior Department report released last week that
said industry and government should work together to create an
Arctic-specific model for petroleum exploration. The model would focus on
standards for drilling and emergency response. "We welcome the
opportunity to work with the federal government and other leaseholders to
further define and clarify the requirements for drilling offshore
Alaska," Johansen said. "Once those requirements are understood, we will
re-evaluate our Chukchi Sea drilling plans. We believe this is a
reasonable and responsible approach given the huge investments required
to operate offshore in the Arctic."
U.S. Sen. Lisa Murkowski, R-Alaska, called the decision disappointing but
not unexpected. "Companies can't be expected to invest billions of
dollars without some assurance that federal regulators are not going to
change the rules on them almost continuously," she said in a prepared
statement. "The administration has created an unacceptable level of
uncertainty when it comes to the rules for offshore exploration that mu
st be fixed if we're going to end our dependence on oil from the Middle
East."
Interior Department spokeswoman Jessica Kershaw said in an email request
for comment that the Obama administration remains fully committed to
supporting safe and responsible exploration of potential energy resources
in the Arctic. They present unique technical challenges and environmental
and cultural considerations, she said. "The expectations have been
crystal clear from the very beginning that any approved activities will
be held to the highest safety and environmental standards," Kershaw said.
Environmental groups said oil companies simply are not ready to drill -
or to clean up a major spill if it occurs in waters with ice that can
vary from slush to many feet thick."The Arctic is dangerous and a tough
place to work," said Chris Krenz of Oceana by phone from Juneau. "Shell
certainly demonstrated that in spades. It's a tough place to work."
Shell estimates that it has sp ent upward of $5 billion on Arctic
offshore drilling but its drilling was bedeviled by problems last
year.Shell performed preliminary work on exploratory wells in both the
Chukchi Sea and the Beaufort Sea but was restricted from drilling into
oil-bearing rock because it had not finished work on a spill response
barge promised in its spill response plan. A containment dome, a key
piece of equipment, was damaged in testing off the Washington coast.
Seasonal ice in the Chukchi Sea delayed Shell vessels from moving north.
When Chukchi drilling began in September, a major ice floe forced Shell's
drill ship off a prospect less than 24 hours later. When the drilling
season ended, the Coast Guard announced that it had found safety
violations on the Noble Discoverer, which drilled in the Chukchi. The
Coast Guard has turned over its investigation of the vessel to the U.S.
Department of Justice.
Problems peaked in late December when the drill vessel Kulluk, a circular
barge that operated in the Beaufort, broke away from its towing vessel on
its way to a shipyard in Washington state and ran aground on an Alaska
island.Both vessels will be repaired in Asia shipyards. Shell previously
announced it would not resume drilling in 2013 Krenz said existing
technology is not sufficient to protect Arctic ecosystems and
opportunities for subsistence from drilling and a possible oil spill. He
agreed that specific standards must be developed for the Arctic.
"The oil is not going anywhere but the technology to protect the Arctic
can improve," Krenz said. Marilyn Heiman, director of the Pew Charitable
Trusts' U.S. Arctic program, said in a statement that challenges in the
Arctic are considerable.

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