By the Journal of Commerce

The U.S. 9th Circuit Court of Appeals heard oral arguments Dec. 4 in a hearing on a lawsuit against Shell's offshore drilling program in Alaska brought by Inupiat Eskimo whalers, environmental groups and the North Slope Borough.

An injunction issued by the appeals court last August blocked Shell's 2007 exploration in the Alaskan Beaufort Sea, and the court agreed to hear the merits of the case in December. A decision isn't expected for some time, according to Shell spokesman Curtis Smith.

In a brief hearing, Shell asked the court to expedite a decision, indicating that substantial planning is needed to prepare for drilling in the short open-water season in the Beaufort Sea.

In a deposition submitted to the court Chandler Wilhelm, Alaska exploration vice president for Shell Exploration and Production Co., said the company needs to have a decision by the end of March to plan for the 2008 summer season.

Shell had planned to drill three exploration wells on federal leases in Outer Continental Shelf waters of the Beaufort Sea, and had assembled a flotilla of two drill ships, icebreakers and other vessels in Alaska waters to support the effort. The fleet was kept on standby for several weeks after the injunction was ordered in hopes an agreement might be worked out to allow at least one well to be drilled.

Shell let the vessels go when it became apparent the injunction would stay in place until a decision comes from the appeals court following the December hearing.

The plaintiffs argued that Shell's drilling would be a threat to migrating bowhead whales and that the U.S. Minerals Management Service had done an inadequate assessment of the effects on the whales.

Shell planned its drill ship work for the ice-free season - running through August, September and October - in the Beaufort Sea and had offered to suspend drilling during several weeks of the whale migration. The offer was not accepted by the plaintiffs, however.

“Shell believes the decision (by the MMS) to approve its plan of exploration for offshore Alaska should be upheld,” the company said in a written statement. “We also believe an injunction is unnecessary while the court considers the merits of the case.”

The company said it had developed a plan with the Inupiat communities earlier this year to mitigate impacts of the drilling.

“Shell, the Alaska Eskimo Whaling Commission and the whaling associations (in communities along the coast) signed a conflict avoidance agreement for 2007 in which Shell agreed to halt drilling operations for the duration of the annual whale hunt,” the statement said.

Shell's 2007 program was the first substantial exploration in the Beaufort Sea in offshore areas beyond the protected waters inside the coastal barrier islands. The prospects that would have been tested are about 15 miles to 20 miles north of the Camden Bay and Point Thomson area 60 miles east of Prudhoe Bay.

Earlier exploration wells by Unocal Corp. (now Chevron) found oil in the area Shell wants to drill but the discoveries were not feasible to develop at the time.

There was a burst of exploration in the Beaufort Sea in the 1980s by Unocal, Amoco and Shell but activity was dampened after oil prices dropped and a very costly dry hole was drilled by Sohio at its Mukluk well, in OCS waters north of the Colville River delta.

Shell's planned Beaufort Sea program is the first major venture by industry into Beaufort Sea waters beyond the protected areas near shore.