Oil & Gas Law Brief

On March 28, a federal court in Alaska issued a preliminary injunction that bars Greenpeace USA from interfering with ships that Shell is using to support its plans to drill in the Beaufort and Chukchi Seas off the northwestern coast of Alaska, where Shell holds oil and gas leases it obtained from the federal government.

Shell filed its suit in late February, after Greenpeace activists illegally boarded and occupied a drilling ship that Shell had contracted for use in its Alaska drilling program.  The ship was located in New Zealand at the time, and Greenpeace stated to the media that "we can't let this ship get to the Arctic." 

Greenpeace opposed Shell's request for a preliminary injunction, but the court rejected each of Greenpeace's main arguments.  For example, Greenpeace USA asserted that there are multiple Greenpeace organizations, that the Greenpeace group that boarded Shell's ship in New Zealand was a different group than Greenpeace USA, and that the other group's conduct could not justify an injunction against Greenpeace USA.  The court concluded, however, that evidence demonstrated that Greenpeace USA had "fully endorsed the New Zealand activists."  Further, Greenpeace described itself on its website as including "more than 40 Greenpeace offices around the world, with international coordination through our headquarters in Amsterdam."  Moreover, Greenpeace USA's general counsel testified at the preliminary injunction  hearing that illegal activity is one of the tools in the organization's "toolkit of tactics."

Greenpeace USA also argued that a preliminary injunction was improper because Shell had offered nothing more than speculation that Greenpeace USA might attempt to interfere with Shell's drilling.  The court disagreed, stating that Shell had proven "by a preponderance of the evidence that it is likely Greenpeace USA would intend to commit tortious or illegal acts against Shell's Arctic drilling operations in the absence of preliminary injunctive relief."  Although the court relied primarily on statements on Greenpeace USA's website and the organization's endorsement of the illegal boarding committed by Greenpeace activists in New Zealand, the court stated that it also had "accorded a minor degree of weight" to Greenpeace USA's failure to offer any testimony whatsoever denying that it intended to improperly interfere with Shell's ships.

This court finds that the natural response by Greenpeace USA to Shell's accusations against it would have been to deny any intention to commit illegal or tortious acts against Shell.  But no such response has been made by Greenpeace in the record."

Accordingly, the court entered a preliminary injunction that bars Greenpeace from interfering with Shell's ships while they are in coastal and U.S. territorial waters.  Specifically, the injunction bars Greenpeace USA an those who act in concert with it from approaching nearer than 500 or 1000 meters from 19 specifically-listed ships that Shell intends to use in supports of its exploration off the Alaska coast (a specific distance is listed for each ship).  The preliminary injunction is scheduled to last until October 31, 2012 or until the court issues an order otherwise, while the parties continue to litigate whether the court should make the injunction permanent.

As noted in a prior post in the Oil & Gas Law Brief, Shell obtained offshore leases from the federal government several years ago for various tracts in the Beaufort and Chukchi Seas.  Shell presented an exploration plan and environmental assessment to regulators, who reviewed that information and recently gave Shell permission to proceed with exploration.   

Effective October 1, 2011, the United States Department of Interior replaced its Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) with two new bureaus -- the Bureau of Safety and Environmental Enforcement (BSEE) and the Bureau of Ocean Energy Management (BOEM).  The Department of Interior recently announced the reorganization, which the Department described as the culmination of a process to replace the former Minerals Management Service (MMS) with three separate organizations -- BSEE, BOEM, and the Office of Natural Resources Revenue (ONRR), each with separate functions.

The former MMS had responsibility for overseeing the development of resources from the outer continental shelf, as well as the responsibility for regulating and overseeing the safety of such development.  About a month after the April 20, 2010 explosion aboard the Deepwater Horizon, Secretary of the Interior Ken Salazar directed that MMS be split into BSEE, BOEM, and ONRR. 

The reorganization has proceeded in three steps.  The first step was simply the renaming of MMS, which became BOEMRE in June 2010.  Second, ONRR became a separate office within the Department of Interior on October 1, 2010, with responsibility of collecting revenue from mineral leases covering federal lands.  The third step is the split of BOEMRE into BSEE and BOEM. 

The new BSEE has the responsibility for overseeing safety and environmental regulations for oil and gas operations on the outer continental shelf.  Pending completion of a "national search" for a permanent director of BSEE, the new bureau will be led by Michael Bromwich, who lead BOEMRE up until its split.

BOEM will be led by Tommy Beaudreau, and will be responsible for managing the development of resources on the outer continental shelf.

On August 4, 2011, the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) announced that it has granted conditional approval for Shell's revised Exploration Plan to drill as many as four shallow water exploration wells in Alaska's Beaufort Sea beginning in July 2012.  The area where the drilling would take place is covered by leases acquired by Shell in lease sales conducted in 2005 and 2007.  The conditions that accompany the approval include requirements that Shell secure all necessary permits from other agencies, including the Environmental Protection Agency, the U.S. Fish & Wildlife Service, and the National Marine Fisheries Service.

In early May, this blog reported that Shell had filed a revised Exploration Plan for drilling n the Beaufort Sea, which is located off Alaska's northern coast.

BOEMRE's approval of Shell's exploration plan follows the bureau's completion of a site-specific Environmental Assessment to examine potential environmental impacts of the drilling.  BOEMRE's announcement stated that the bureau had "found no evidence that the proposed action would significantly affect the quality of the human environment."  For that reason, BOEMRE stated that an Environmental Impact Statement would not be required.

BOEMRE's website has a page with links to various important documents relating to the drilling project, including Shell's 198-page revised Exploration Plan, BOEMRE's 238-page Environmental Assessment, BOEMRE's Finding of No Significant Environmental Impact.

Last week, President Obama gave a speech in which he called for reducing oil imports by a third over the next ten years.  The President urged increased use of natural gas and increased domestic production of oil as two steps that can be taken to help reduce oil imports.  Both steps have merit, but the federal government itself has taken actions that are undermining efforts to increase production of domestic oil. 

For example, a planned March 2011 sale of new lease tracts in the Gulf of Mexico was postponed by the Department of Interior because the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) still is analyzing possible environmental impacts.  Richard Thompson has written an article that discusses these issues.  Thompson presents the viewpoints of all sides -- the federal government, industry, environmentalists, and others.  But perhaps the most practical point was made by Eric Smith, associate director of the Tulane Energy Institute.  Smith said:

Every barrel that we do not produce at home is another barrel that we're going to have to import."

Offshore drilling regulations already have been tightened, but reporter Bruce Alpert notes that many environmentalists are using the upcoming anniversary of the Deepwater Horizon tragedy as a basis to push for still more restrictions on drilling.  Let's hope that BOEMRE avoids the overreaction urged by some environmentalists, and allows industry to get back to a normal pace of drilling operations in the Gulf.  Unless that happens, it is hard to imagine that we can cut oil imports by a third.