Unsurprisingly, a group of environmental activists have brought suit against Shell based on the company’s planned drilling in Arctic waters off of Alaska.  The lawsuit, filed by Greenpeace, the Natural Resources Defense Council, the Sierra Club and others in the U.S. District Court for the District of Alaska, was actually anticipated by Shell, who weeks ago brought a preemptive lawsuit seeking a declaratory judgment that it had complied with all regulatory requirements.   Shell filed the preemptive suit, the first of its kind, in an effort to prevent “last minute legal maneuvers to delay properly approved operations,” and to quash the uncertainty regarding its ability to move forward with oil exploration.  Contrary to critics’ attacks, Shell’s suit did not seek to prevent judicial review of its permits, but rather to accelerate it.  To the chagrin of many activists, U.S. District Judge Ralph R. Beistline allowed the suit to proceed in Alaska federal court, recognizing the company’s interest in having potential challenges adjudicated promptly in order to protect its investment of over $4 billion.

It’s been one long haul to the Arctic for Shell, who has invested a considerable amount of money in the endeavor, jumped through a number of regulatory hoops, and already encountered lawsuits along the way–in just February a group largely comprised of the defendants in the Shell suit challenged the EPA’s issuance of permits to Shell in the Ninth Circuit.  In April, the same groups appealed an earlier attempt to have Shell’s lease sale overturned.

Since purchasing the drilling leases in the Chukchi and Beaufort seas, Shell has invested over $4 billion in its Alaska offshore program without being able to utilize one drill.  The leases are valid for just 10 years, a time limit that is particularly of concern considering that drilling in the Arctic is restricted to just a few months a year by Arctic conditions and regulatory reasons.  Though permitted to drill from July to October of this year, Shell was forced to postpone its drilling plans until August due to heavy summer ice.

In seeking to utilize its drilling leases, Shell has complied with an array of regulatory requirements, including adhering to regulatory changes enacted in response to the Deepwater Horizon incident, obtaining Bureau of Safety and Environmental Enforcement  approval of well-specific drilling permits and response plans, gaining Bureau of Ocean Energy Management approval of plans to accommodate local fauna and villages, receiving authorization from the National Marine Fisheries Service, and acquiring EPA permits.

The latest hurdle, the activist lawsuit, accuses the Bureau of Safety and Environmental Enforcement of “rubber stamping” Shell’s 450-page oil spill response plan.  It remains to be seen what approval procedure will not evoke a lawsuit from these groups.  Shell’s plans include providing a flotilla of on-site response vessels near all rigs, and stationing response equipment strategically along Alaska’s Arctic coast.  The environmental groups object to the response equipment not having been tested in Arctic conditions.  They say the agency did not make sure Shell could respond to a “worst case” oil spill to the “maximum extent practicable.”

Alaska’s outer continental shelf is estimated to contain 27 billion barrels of oil, and more than 100 trillion cubic feet of natural gas.  Shell safely drilled in this area in the 1980s, but abandoned the project when oil prices plummeted.  While Shell plans on getting underway in August, we’ll have to see which way the regulatory winds blow.