It was the first action taken by the Obama administration on Alaska outer continental shelf exploration.

The North Slope Borough, which opposed a similar plan from Shell in 2007 and filed a lawsuit to stop the drilling, has made favorable comments about the latest proposal.

The approval was on Shell's exploration plan, the initial step in the company's effort to acquire federal and state permits for drilling.

Shell still has obstacles to overcome, including an important federal air quality permit and permits from the state of Alaska.

Also, it's likely that environmental groups will again sue to stop Shell's drilling, as they did when the company proposed a plan two years ago.

North Slope Borough Mayor Edward Itta made no comment of litigation in a statement following the MMS decision.

"Shell made a substantial effort to reduce impacts and shrink the footprint of its 2010 exploration work in the Beaufort Sea, and I appreciate that," Itta said in his statement. "We will continue to work with them to achieve the safest possible operation in these sensitive waters. We'll also be watching to see if state and federal regulators do their part in assuring safe operations too."

MMS's decision requires Shell to suspend drilling during the autumn migration of bowhead whales through the Beaufort Sea so that Alaska Native hunters would be able to conduct subsistence hunting without disturbance.

Shell would be able to return to the drilling after the subsistence hunt is completed, the MMS said in its decision.

Shell plans to use the drillship Frontier Discoverer, which has been modified to operate in summer Arctic ice conditions.

The company also hopes to drill a well in 2010 in the Chukchi Sea using the drillship, but MMS approval for that exploration is still pending.

Shell will still have to acquire several other federal and state approvals, including an air quality permit that would be issued by the U.S. Environmental Protection Agency, as well as an Alaska Coastal Management Program consistency determination from the state of Alaska.

The MMS approval is significant to Alaska, as it is the first OK from Interior Secretary Ken Salazar and the Obama administration for OCS exploration.

"This decision shows Secretary Salazar and the Obama administration recognize the importance of Alaska's abundant offshore oil and gas resources," Sen. Mark Begich, D-Alaska, said in a written statement.

Begich said he sees the decision as a positive signal that the administration also will approve exploration in the Chukchi Sea, which is believed to hold substantial oil and gas resources.

Shell spokesman Curtis Smith said the decision is a positive step following the company's earlier frustrations with Arctic exploration.

Shell received MMS approvals to explore the Beaufort in 2007, but the action was halted by the U.S. 9th Circuit Court of Appeals after environmental groups and Alaska Native whale hunters.

Under the approval given this month, Shell must suspend drilling on Aug. 28, 2010, the approximate time that bowhead whales could be in Alaska waters on their annual migration west from the Canadian Beaufort Sea.

Shell is required to move the drillship out of the whale migration corridor. The vessel can return, and drilling resume, after the subsistence whale harvest is completed, according to the MMS.

Shell had reached agreement with Native whalers in 2007 on a similar plan to suspend drilling in the earlier exploration effort but the plan was not then formally incorporated into the MMS approval, as is the case now.

"Now that we have approved Shell's plan and reached this important milestone, we will continue to work with Shell to ensure that all activities are consistent with safe operations," MMS Director Liz Birnbaum said.

The 9th Circuit appeals court never made a decision on the 2007 lawsuit, although an injunction against drilling was issued. After hearings and an extended period Shell withdrew its 2007 exploration plan, which essentially voided the lawsuit.

Shell has since filed a new exploration proposal with drilling planned on different leases than was the case in 2007.

Environmental groups likely will fight the move. The Center for Biological Diversity, an Arizona-based group, said a lawsuit was likely. The center was part of the 2007 lawsuit.

The Center for Biological Diversity said petroleum companies have still not adequately demonstrated a capability to clean up spilled oil during broken ice conditions.

Shell said new research in Norway indicates that the majority of oil spilled in ice-covered waters can be recovered. The company will assemble a small armada of spill response vessels and equipment that will accompany the drilling vessel, Shell spokesman Smith said.

There have been changes on the legal front that could affect a new lawsuit, too.

Since the 2007 case was filed, the 9th Circuit in a separate lawsuit upheld the MMS' reliance on an environmental assessment of the drilling rather than the more extensive environmental impact statement.

This was in a case brought by the North Slope Borough against the MMS on the specific point of not preparing an EIS.

The agency's decision to use the more streamlined environmental assessment was a key part of the lawsuit filed in 2007.

MMS had argued that an EIS had been done when it prepared lease sales in the Beaufort Sea in 2005, and that doing a second EIS for drilling wasn't necessary.

Environmental groups who led the 2007 lawsuits said they are likely to sue once more. Rebecca Noblin, staff attorney for the Center for Biological Diversity, said her group is studying litigation options. A case would have to be filed within 60 days under the Outer Continental Shelf Lands Act, she said.

Nobin said her group's major concern was about the effects on wildlife resulting from the drilling, particularly if an oil spill were to occur.

Shell's proposed drilling location, in Camden Bay in the eastern Alaska Beaufort Sea, is an important feeding ground for bowhead whales during their annual fall migration along the northern Alaska coast, Noblin said.

Tim Bradner can be reached at

tim.bradner@alaskajournal.com.