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Federal Appeals Court Ruling Could Impact Arctic Oil Development

Published On: Jan 22 2014 01:10:49 PM AKST   Updated On: Jan 23 2014 06:10:13 AM AKST

A federal appeals court has ruled that federal regulators conducted inadequate environmental studies before selling $2.7 billion in petroleum leases off Alaska's northwest coast.
The decision could affect leases acquired in 2008 by Royal Dutch Shell in the Chukchi Sea. The company is considering additional exploratory drilling there this year.

Shell spokesperson, Meg Baldino, told Channel 2 Wednesday "We are reviewing the opinion."

Alaska's Oil and Gas Association's CEO and President, Kara Moriarty, did release a statement.

"We are disappointed in the result and believe that the dissenting opinion accurately states and applies the law.  We are in the process of considering the potential implications of the majority's opinion," wrote Moriarty.

A three-member panel of the 9th Circuit Court of Appeals ruled in a split decision Wednesday that federal regulators prepared an environmental assessment based on recovery of just one billion barrels of oil.

Environmental groups said development was likely to be far more widespread in the Chukchi, home to polar bears, walrus, ice seals and endangered whales.

"There are a lot of species up there that are already in trouble and adding Shell and other oil companies to the mix is a recipe for disaster," said Rebecca Noblin, director at the Center for Biological Diversity. "We don't have any capabilities to clean up oil spills in the ice conditions that we have in the arctic."
Appeals Court judges agreed and said the environmental assessment should have been based on a full range of likely production.

Senator Mark Begich said the courts ruling won't delay Shell from drilling in the Chucki Sea. He says he's going to do whatever he can on the federal level to make sure everything stays on schedule this summer.

"I feel confident they've done an enormous amount of work to get prepared, I think this is just a small little issue in the larger picture of bringing energy and jobs to Alaska," said Begich.

Now it's up to a federal judge in Alaska to reconsider how extensive the environmental impact studies done by the U.S. Department of Interior will have to be.