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Raising Shell with the 9th Circuit Court

By: Josh Painter (Diary)  |  December 19th, 2008 at 09:16 AM  | 

RESIZE: AAA

Shell Oil wanted to drill in the Beaufort Sea region of the Artic Ocean and submitted its drilling plan with the U.S. Minerals Management Service, which analyzed the company’s exploratory plan, determined that it would have minimal impact on marine mammals and eskimo subsistence activities and issued its approval in February 2007. But several environmental groups, the Alaska Eskimo Whaling Commission and the North Slope Borough (county) filed suit to stop the oil company. The matter was litigated all the way up to the Ninth U.S. Circuit Court of Appeals, which last month vacated approval of the plan by the MMS…

…and remanded the plan to the agency for an enhanced environmental assessment or, “as necessary,” an environmental impact statement.

The oil company, after investing $2.2 Billion in the federal oil leases alone, had already decided last June to abandon its plans to drill in the Beaufort, because the Ninth had ruled that Shell could not conduct drilling operations while the court was deliberating the case.

But this is not the end of the story. Alaska’s governor announced yesterday that on behalf of the state of Alaska, she intends to support Shell’s petition to the Ninth for a rehearing by the full court. Expressing disappointment with the Appeals Court ruling, Gov. Palin said:

“Alaska’s economic past and future are tied directly to the development of our abundant natural resources. The loss of this exploration activity will cost our state’s families hundreds of jobs next year.”

Environmental groups routinely try to block oil companies no matter how, when or where domestic drilling is attempted. The greenies are well-funded, have armies of lawyers and can tie up drilling activities in the courts for years. What is unusual in this case, is for such groups to ally themselves with whaling interests. Environmentalists are known for wanting to save the whales, but in the Beaufort they are showing themselves to hate the idea of an energy secure America which relies on its wealth of domestic energy resources much more than they love the whales.

Also, the Ninth Circuit court of Appeals has a reputation for being the most liberal court in the nation. Alaska’s governor has her work cut out for her. But daunting challenges have never deterred Sarah Palin. She’s not the kind to back down from a fight, even when the odds are not in her favor. When Palin believed that the oil companies were not acting in best interests of her state, she took them on and prevailed. In this case, where drilling by Shell Oil will benefit Alaska, as is the governor’s view, she’s willing to be its ally in the fight.  

- JP

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COMMENTS

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  • chemjeff

    n/t

    • randy streu

      Since when does the court get to tell another government agency how to do its job? Are the judges also environmental experts? ‘cuz I bet the people at the MMS are.

      • larueladue

        They are LAWYERS, who are obviously experts in any field that catches their fancy…

      • mbecker908

        and the Republicans (see: McCain/Graham) are as utterly feckless,as usual, the Ninth Circus may be our most conservative court.

    • Lammo

      who have to live under their thumb (including me) refer to that particular court as the “9th Circus”.

  • Achance

    Whenever you hear the words culture or subsistence from Alaska Natives (Eskimos and Indians) understand that those words are Eskimo for “the bidding may now begin.” The North Slope and Northwest Arctic Boroughs are majority Inupiat Eskimo and both are very, very wealthy. The North Slope Borough lives off revenue from the Prudhoe Bay oil fields and the Northwest Arctic Borough has the huge Red Dog Mine complex as well as a very profitable ANCSA Native Corporation.

    The Eskimo people have a right to take whales and commonly take a few each year. The basis of the right is both the food value of the whales and the cultural significance of whaling. Don’t worry, none of us Alaskan honky dogs can take whales and Sarah Palin is not known to have killed one on the sly. There are plenty of whales, so any danger to them from oil development is purely theoretical, but it makes a good story to ignorant and superstitious people like greenies. Likewise, the Eskimo people would not go hungry without the whale meat; they take their food mostly from the grocery store just like the rest of us, but that myth plays well to ignorant and superstitious people like liberals.

    The real issue for the NSB and NAB is how much of the oil revenue they’ll get. This is a fight between them and both the US and the State of Alaska. All of this development is offshore and under federal control on federal lands. Under the Statehood Act, Alaska should get 90% of the revenue, but the US has NEVER abided by the Statehood Act, a fact which gives rise to things like the Alaska Independence Party of recent notoriety. So, the fist step will be some resolution between the US and Alaska on State share and the second will be a resolution between Alaska and the two Boroughs on how much of the State’s take they’ll get.

    My take is that none of this is going to much matter. The USSC will probably overturn the 9th Soviet; they usually do. Then the Greenies will just sue on some other basis and stop it all again, and again, and again. The Majors give every appearance of having given up on Alaska as an oil province – it is just too much hassle. BHO will have no choice but to go along with the Greenies on AGW Psychosis and threats to the polar bear and other superstitions. BHO will also stupidly go along with various “tribal” sovereignty claims so, USSC decisions notwithstanding, a lot of Alaska will become “Indian Country.” Alaska just lost 50% of its ability to oppose these assaults against its sovereignty in the US Senate, Begich will mouth sweet nothings but go along with the feds as did his mentor and predecessor, Tony Knowles.

    So, Alaska will probably get a pyhrric victory in the USSC, some lawyers will make a lot of money, but nothing will come of it and American dependence on foreign oil will become greater.

  • Vladimir

    They may rather take their chances with Nigerian tribesmen toting AK-47s than with a bunch of American trial lawyers.

    The key question is, will the Feds give them their lease money back?

    Those leases could not have been offered in the first place without an environmental impact statement.

    • youthgrunt

      Of course the price of oil tends to change over time. If you only began a drilling project when the price was high you would miss the profit opportunities.

      Right now is the time to be developing new sources so that when the economy improves and oil goes back to $60-80 you have the supply to make your money.

    • Achance

      and substitute their own “judgement.” There isn’t even a pretense of deference to the expertise of the permitting agencies, especially State permitting agencies. We’re going to the USSC as we speak on the permit for tailings storage at the Kensington mine near Juneau. This is fully permitted by both the State and federal governments. To add insult to injury, the Greenies were heavily involved in the permitting process and the company changed their plan to suit the greenies who then sued anyway despite the fact that the tailings disposal plan was their own. 9th Soviet just ignored the Agency permits and their underlying process and science and threw out the permit based on the very vague Clean Water Act. The insiduous thing about the way they interpret the CWA is that naturally occuring materials are considered pollutants, so there is no way to avoid “polluting.”

    • Josh Painter

      and Shell knows it. Like all oil companies, they have experienced the ups and downs of petroleum prices. They also know only too well the process of going to court against the tree and polar bear huggers and their batteries of lawyers.

      Oil leases are long-term deals, and oil companies rarely try to sell them back to the federal governmnet unless exploration shows that there’s not enough oil or that it will be too expensive to extract. When companies do sell back the lands, they usually take a loss.

      - JP

      • Vladimir

        … I know as well as anyone that they have a long term view. They were the pioneers in the deepwater Gulf of Mexico and in other technology-leading areas around the globe.

        But they’re also not stupid.

        They bid $105 million last February on a single lease in the Chukchi Sea, in a lease sale whose winning bids topped $2.7 billion.

        http://www.adn.com/oil/story/307588.html

        With oil now at a third or less of the value it had earlier this year, and with a recalcitrant landowner, the leases are worth less. A lease sale next February (if they had one) would not bring anything close to $2.7 billion, from Shell or anybody else.

        When international oil companies decide where to operate, they assess all the risks: geological, mechanical, economic and political. Once the greenies and the Eskimos Inuit run Shell’s perception of political risk to an unacceptable level, they’d be justified to pull up stakes and go elsewhere. And the Feds should give them their lease money back.

        • Achance

          the Greenies can’t. There simply is no such thing as a good faith bargain with the Greenies. See my discussion of the Kensington Mine above. Couer gave them everything they asked for and they still sued and shut down the mine. Interestingly and ironically, Couer did most of their recruiting through the Sealaska Corporation, the ANCSA Native Corporation for Southeast Alaska, and many of the employees were Tlingit Indians from Southeast villages. They thought the Greenies would be reluctant to get crossthreaded with the Indians. Didn’t even slow them down. So, when work was stopped, all those Indians went from $70-80K mining jobs to whatever there was in the village or unemployment. There’s nobody working at all but a small caretaker crew pending the litigation.

    • John Steele

      … they can use it to buy mercenaries to deal with the Nigerians. Still safer and more profitable than an American courtroom.

      • mbecker908

        I personally like that one better.

        • woodsman

          if they loose their charter to work in Iraq.

  • Magic2171

    One of the thing not mentioned so far is that the Ninth is also the most overturned court in the country. The are usually chosen by the lunatic fringe elements of the democratic party and then I assume become true believer or are given suffienctly enjoyable gifts to allow them to rule in the proper manner.

    Some mentioned getting a agreement with the enviromental groups to proceed, from personnel experience do not do that. What you understand and is written into the agreement is not what the radical greens understand. They break agreements without fear, because no court would do more than slap there wrists or they would arrange for the media to give the PC clowns bad publicity.

    Never trust a Enironmental Group