Shell Alaska Announcement Demonstrates Difficult Permitting Environment

HOUSTON — This afternoon, Shell announced it will forgo a 2011 drilling program in Alaska based on the recent remand of the Environmental Protection Agency (EPA) air permits, and will use the remainder of the calendar year to work with regulators to obtain the permits needed for an expanded 2012 exploratory drilling campaign. Consumer Energy Alliance (CEA) president David Holt, released the following statement on today’s announcement:

“With the U.S. Department of Energy estimating that oil may hit $110 per barrel by the end of year, this announcement could not come at a worse moment for American consumers. During these times of high unemployment, a recovering but unstable economy and continued turmoil in the Middle East, this decision highlights the shortfalls of our nation’s energy policy. Rather than restricting access to homegrown energy sources and forcing oil and gas producers to abandon critical revenue-generating projects, we need to instead consider the benefits of thoughtfully and safely exploring Alaska and other offshore areas for the sake of our national security and independence from foreign energy sources.

“Given that Alaska’s offshore potential is estimated at 27 billion barrels of oil and 132 trillion cubic feet of natural gas, clearly that state’s energy supplies – with the help of the trans-Alaska pipeline — will continue to play a crucial part of America’s future energy security.  Further, ensuring that the trans-Alaska pipeline is operating and able to provide the nation with oil and natural gas today and well into the future, is a critical issue for both U.S. energy security and our national security.  Without TAPs, California would have to immediately turn to Russia to meet its crude oil needs, and, given Russia’s recent use of its natural gas as a political tool against Eastern Europe, I’m not sure this is a contingency plan that is in our best interests.

“By safely and efficiently exploring offshore Alaska, the U.S. stands to gain much-needed royalty and tax revenues, as well as tens-of-thousands of American jobs spread throughout the nation – providing the U.S. with an economic stimulus that will strengthen future generations to come. “With the federal government already receiving more than $3 billion in revenues from companies seeking to invest in Alaska’s offshore, and tens of billions of new federal revenues to come once development begins, it makes sense for the Administration to allow thoughtful, safe exploratory develop to occur.  No other federal revenue source offers more promise at a time of record deficits, unmanageable debt and the need for fiscal responsibility. While we are disappointed with the delays caused by the EPA’s inability to issue key air permits in Alaska’s offshore, CEA looks forward to working with policymakers to ensure continued access to affordable energy supplies for the nation’s consumers– from the North Slope to the Gulf Coast.”