Fennica rejoins fleet, Shell seeks to drill for oil

Photo/Jim Paulin/For the Journal

Shell is continuing its drilling program in the Chukchi Sea. The company completed a “mud-line” cellar at its Burger J well location the weekend of Aug. 8, and the ice management vessel Fennica was to arrive on site on Aug. 12, federal agency and company officials said.

Without the Fennica and its cargo of a capping-stack device to be deployed in the event of a well blowout, Shell only has permits to work on “top holes,” or the upper part of a well and with no penetration of potential oil-bearing zones.

With the Fennica now on site, the company has applied for modifications of its drilling permits so that it can drill deeper after the upper part of the well is finished and a blow-out preventer is installed.

Guy Hayes, spokesman for the U.S. Bureau of Safety and Environmental Enforcement’s Alaska region, said no estimate can be given on how long it may take to process Shell’s request for permit modifications.

“We’re going through the applications in detail now,” Hayes said.

Shell’s semi-submersible drilling vessel Polar Pioneer is working at the Burger J location. Another drill vessel, the Noble Discoverer, a drillship, is moored at a second well location, Burger V, where Shell also hopes to drill this summer.

Shell may drill just one well at a time, although the second drillship can be kept nearby and ready to drill when the first vessel finishes a well. Federal rules prohibit simultaneous drilling by drill vessels within 15 miles, and Shell’s planned well locations, for this year, are nine miles apart.

The wells are grouped around the Burger discovery made originally by Shell in the early 1990s. In 2012 Shell was able to drill a partly-complete well, Burger “A” at the site of the earlier discovery.

Company spokeswoman Meg Baldino has previously said Shell chose not to return to Burger A this season because it believes a better picture of the potential reservoir can be gained by drilling at nearby locations identified as Burger J and V in the company’s drill plan.

The Fennica was delayed arriving in the Chukchi Sea when it developed a hull crack after striking a previously uncharted obstacle on departing Dutch Harbor July 3. The vessel was sent to a Portland, Ore., shipyard for repairs and then returned to Alaska waters.

Shell has permits to drill two wells. The company can operate in the Chukchi Sea into the fall, most likely late September.

“Our plan is to make as much use of the time that we have in theatre before the ice arrives in (fall) 2015. Whatever we don’t accomplish in the summer ahead we are fully prepared to finish in 2016,” Baldino said in the statement.

Shell’s hopes are high for a significant discovery in the Chukchi Sea after having spent more than $6 billion since the leases were acquired in a federal Outer Continental Shelf lease sale in 2008. ConocoPhillips, Statoil and Repsol also acquired leases in the sale but are letting Shell take the lead in exploration to gauge the ability of federal agencies to work with Arctic OCS exploration.

Government geologists believe the Chukchi Sea has prime potential for major oil and gas discoveries and Shell’s first discovery at Burger in the early 1990s was significant but at the time was believed to be mainly a gas discovery.

Now, with the benefit of improvements in seismic and other exploration technology the company, and the government, believes there is oil present as well as gas.

However, the prospect is 70 miles offshore, requiring a pipeline to shore and construction of an additional 350-mile onshore pipeline across the National Petroleum Reserve–Alaska to the Trans-Alaska Pipeline System. 

If a discovery is made at Burger it will have to be large enough to support of the cost of the support platform, long-distance pipelines and other facilities. Shell executives have said that it will be 15 years, at the earliest, before any Chukchi oil can flow into TAPS. At current prices of about $50 per barrel the project would not be economic, but it becomes profitable at prices greater than $70 per barrel.

11/20/2016 - 11:53am