Feds seek lease nominations for 2017 Beaufort Sea sale

Shell has not yet been allowed to drill on its existing leases in the Alaskan Beaufort Sea but the federal government is now requesting proposals from industry on areas to be offered for lease there, according to a notice published July 29 in the Federal Register

The U.S. Bureau of Offshore Energy Management is calling for lease nominations for OCS Sale 242 planned for 2017, according to the notice.

“The 45-day call (for nominations) seeks to gather information about specific areas within the Beaufort Sea planning area that have the most promising oil and gas potential,” according to the press release.

In a statement, BOEM acting director Walter Cruickshank said, “There is significant oil and gas potential in the Beaufort Sea, but this part of the Arctic Ocean is also a unique and sensitive environment that is crucially important to the subsistence needs of Alaska Native communities on the North Slope.”

Shell acquired a large number of leases in the Beaufort Sea beginning in 2005 but has been prevented from drilling, at first by court injunctions in lawsuits brought by conservation groups and later by the government itself as rules for offshore drilling were revised, a process not yet complete.

Conservation groups are meanwhile criticizing the lease offering.

“The Beaufort Sea, just 12 miles off the Arctic National Wildlife Refuge, is an important ecological and subsistence area,” said Cindy Shogan, director of the Alaska Wilderness League, in a statement. “The Beaufort and Chukchi Seas are central to life in coastal communities, provide important habitat for countless species of wildlife, and play a vital role in regulation the world’s climate.”

BOEM is asking that industry rank its interest in particular areas according to levels of priority ranging from “critical interest” to “no interest.”

The Beaufort Sea planning area extends from OCS areas offshore Barrow to areas off the Alaska/Canada border in the Arctic. Some areas may be excluded from leasing because they are used by bowhead whales, which are threatened, for feeding and calving.

Several companies including Unocal Corp. and Shell have drilled and made discoveries from the 1970s on in the Beaufort Sea federal waters. Unocal discovered “Hammerhead” in the eastern Alaskan Beaufort Sea with a drillship in the 1970s.

The discovery is near two high-priority prospects that Shell has identified in recent years. Unocal said Hammerhead was not economic to develop at the time, however. ARCO Alaska also drilled and made a discovery at Kuvlum, another nearby prospect. Oil was found at Kuvlum but it also was uneconomic to develop at the time.

One early Shell discovery near shore in the Beaufort Sea, at Seal Island, was subsequently developed by BP and is now the producing Northstar field.

Shell still holds a major lease position in the Beaufort Sea and drilled one partial exploration well in 2012 but has shifted its focus to the Chukchi Sea to the west, where a partial test well was also drilled in 2012.

The company hopes to return to the Chukchi Sea in 2015 but has no immediate plans to return to the Beaufort, Shell spokeswoman Meg Baldino has said.

07/31/2014 - 10:21am