Chukchi SEIS approved, Shell on track for 2015

Photo/Harald Pettersen/Statoil

The U.S. Interior Department published a long-awaited Record of Decision March 31 on a contested 2008 Arctic offshore lease sale that had blocked Shell’s exploration plans on leases it purchased.

Meanwhile, Shell has started moving vessels into place for its hoped-for summer 2015 Arctic drilling. Greenpeace, the environmental group, announced March 26 it is trailing the semi-submersible drilling vessel Polar Pioneer after it left Southeast Asia in route for North American waters.

Shell confirmed April 1 the rig is being moved.

The Interior Department’s record of decision, or ROD, gave formal approval to a supplemental environmental impact statement, or SEIS, published in February by the U.S. Bureau of Ocean Energy Management. The revised environmental document corrected a defect in the environmental study for the 2008 lease sale over which environmental groups sued.

Federal courts agreed the 2008 environmental impact document needed revision, and the U.S. BOEM opted to pursue the SEIS as a remedy.

Completion of the process allows the BOEM to begin processing applications by Shell for permits to drill on its leases in the Chukchi Sea. Shell spokeswoman Meg Baldino said the company has submitted a revised exploration plan that would replace one submitted last August.

BOEM will not release details of the plan until it is reviewed, however. Meanwhile, the federal courts had given the agency authority to review the previous plan informally.

Shell is hoping for “conditional approval” of its plan by the end of April, but BOEM would still need to do an environmental analysis of the plan, which may spark more protests from environmental groups.

“Basically, the Record of Decision reaffirms Lease Sale 193 (held in 2008) and clears the way for the BOEM to conclude its review and make a decision on our Revised Chukchi Sea Exploration Plan,” Baldino said in a statement. “As you know, that plan remains contingent on achieving the necessary permits, legal certainty and our own determination that we are prepared to explore safely and responsibly.”

Meanwhile, the U.S. Bureau of Safety and Environmental Performance, a sister agency to the BOEM within Interior, is still working on finalizing new special drilling rules for the Arctic, but Shell need not wait until these are issued, BSEE officials have said.

Most provisions in the new rules have already been agreed to by Shell and would be incorporated into permits.

Shell drilled one partially-complete well in the Chukchi in 2012 along with a partially-complete well in the Beaufort Sea where the company also holds leases.

U.S. Interior Secretary Sally Jewell said the revised document reflects a balanced and thoughtful approach to Arctic exploration by the government.

“The Arctic is an important component of the administration’s national energy strategy,” Jewell said in a statement. “This unique, sensitive and often challenging environment requires effective oversight to ensure all activities are conducted safely and responsibly,” she said.

Environmental groups criticized the action.

“It is unconscionable that the federal government is willing to risk the health and safety of the people and wildlife that live near and within the Chukchi Sea for Shell’s reckless pursuit of oil,” said Marissa Knodel, Earth Climate Campaigner for the Friends of the Earth. “Shell’s dismal record of safety violations and accidents, coupled with the inability to clean up or contain oil in the remote and dangerous Arctic waters, equals a disaster waiting to happen.”

Shell paid more than $2 billion for its leases in the Chukchi Sea in 2008 but has been unable to completely drill an exploration well because of legal and regulatory hurdles. Overall the company has spent more than $5 billion on its Arctic program.

Although its actual Arctic drilling went off without incident, Shell’s 2012 exploration season was beset by mishaps, including the failure to get either its spill containment barge or its containment dome to pass inspection, which prevented it from being able to drill to oil-bearing depths.

While in port in Dutch Harbor, the Noble Discoverer drill rig drifted to shore and the contractor operating the rig was later fined more than $12 million for safety and environmental violations. The season was capped by the conical drill rig Kulluk losing its tow during a storm in the Gulf of Alaska on New Year’s Eve, running aground off Kodiak and resulting in a total loss.

The Noble Discoverer is returning to the Chukchi the summer along with the Polar Pioneer to replace the Kulluk to complete the well started in 2012 and to drill additional wells.

A key goal for the summer is to complete the evaluation of the Burger prospect, a deposit of oil and gas ironically discovered by Shell in 1991 in the company’s earlier Chukchi Sea drilling. Burger appeared to be a large gas discovery and at the time there were no plans for a large gas pipeline from northern Alaska.

Shell dropped its Chukchi Sea federal leases in the 1990s but returned in the 2008 lease sale and reacquired leases on Burger. Subsequent evaluation using tools not available earlier, such as 3-D seismic, led the company to believe the region has substantial oil resources that can be produced.

Drilling must be done to confirm that, however.

11/19/2016 - 6:56pm