Shell Oil debates Arctic drilling plans because of lawsuits

Shell, the giant oil company that hopes to open a new petroleum frontier for Alaska, says it will decide within months whether to risk sending a large fleet of vessels to drill for oil and gas in the Beaufort and Chukchi seas next summer.

Scientists say Alaska's Arctic waters could hide a massive storehouse for oil and natural gas, estimated to nearly rival the onshore discoveries of the North Slope. Betting on that, Shell two years ago spent more than $2 billion to obtain leases in the two seas and mobilized hundreds of millions of dollars' worth of equipment to Alaska.

But after spending all that money, the oil company has been stymied. Environmentalists and North Slope governments sounded the alarm about potential impacts on bowhead whales and the possibility of oil spills. Both sued successfully to block the drilling during the past two summers.

More litigation to block next summer's drilling is likely. The question for Shell's Alaska executives remains whether they have revised their drilling plans enough to survive court scrutiny.

Until that is clear, they say their major challenge lies in obtaining a pair of air pollution permits for drilling in the two seas. The drilling can't occur without these federal permits. And just as the distant Arctic seas are a frontier for oil companies, this sort of permit is a new frontier for the Environmental Protection Agency. The agency has issued just one such permit before -- for Shell's earlier Beaufort Sea drilling proposal -- and the agency's internal appeals board struck it down.

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