Shell finally turns a drill bit in the Arctic offshore

After years of delay and almost $5 billion spent, Shell has a drill bit turning in the Alaskan Arctic offshore. The company began drilling at its Burger prospect in Alaska’s Chukchi Sea early Sunday, the company announced.

“The occasion is historic in that it’s the first time a drill bit has touched the sea floor in the U.S. Chukchi Sea in more than two decades,” Shell spokesman Curtis Smith said. "Today marks the culmination of Shell's six-year effort to explore for potentially significant oil and gas reserves, which are believed to lie under Alaska's Outer Continental Shelf.”

The company has received permission from the U.S. Interior Department to do preparatory work on the well, which includes drilling a “pilot hole” to 1,400 feet to test for shallow gas hazards, excavating a “cellar” at the seafloor in which a blowout preventer will be installed, and drilling the top part of the exploration well to 1,400 feet and installing casing.

Shell has spent massively on its Alaska offshore program, which includes the Beaufort as well as Chukchi seas, but has suffered delays due to lawsuits and changes in federal rules. The company's prime prospect in the Chukchi Sea, Burger, is a known hydrocarbon discovery. Shell drilled and found gas and indications of oil at Burger in the early 1990s, but the discovery was not economic at the time.

Shell reacquired the prospect in a 2008 federal Outer Continental Shelf lease sale and has been working to get permission to drill since then.

“Crews on board the Noble Discoverer have begun drilling a pilot hole to roughly 1,400 feet. Following that, we will begin drilling the 20-by 40-foot mud line cellar, which allows the blowout preventer to sit below the seafloor,” Smith said. “Operations will continue from there to install casing and cement in the top portion of the well.”

Drilling to potential hydrocarbon-bearing zones will require further approvals from the Interior Department and the arrival of a special spill response barge that has been delayed because of problems with final certifications.

In a previous briefing Shell’s Alaska vice president Pete Slaiby said it will take about two weeks to do the preparations for the well and drilling to 1,400 feet that Interior has approved. Once the spill barge arrives it will take about 7 to 10 days to drill an additional 6,000 feet, approximately, down to potential hydrocarbon zones.

Interior regulations require Shell to be complete with any drilling to hydrocarbon zones by Sept. 24 but the company has requested a two-week extension due to forecasts of late winter ice formation this year. Interior has not yet responded to the request for the extension.

Even if the extension is not granted Shell will be able to continue testing the well and to do preparatory work on wells that will be completed in 2013, Slaiby said.

Smith said Shell has six vessels supporting the drillship including vessels to assist with anchor movements and mooring, an oil spill response and supply vessel, an icebreaker and a tanker carrying fuel.

Meanwhile, a second Shell drilling vessel, the Kulluk, is in the Alaskan Beaufort Sea near its exploration site east of Prudhoe Bay. The Kulluk will await the completion of the fall subsistence whale hunt by Inupiat Eskimo villagers before moving to the well location, Smith said.

Interior has set a later deadline, in late October, for the completion of drilling in the Beaufort Sea.

09/10/2012 - 6:51am