NEWS BULLETIN

January 29, 2015 --- Vol. 21, No. 4January 2015

Shell determined to drill in Chukchi Sea this year

Shell remains committed to drill in the Chukchi Sea this year, provided the company can obtain the necessary permits and clear some continuing legal challenges, Ben van Beurden, the company's CEO, said during the company's fourth quarter earnings call today.

"We have retained a very significant capability to be ready this year to go ahead," van Beurden said. "And we've kept all our capability in place, tuned it, upgraded it just to be ready to drill this coming summer season."

But Shell still needs quite a few of its key permits for the Chukchi Sea operations, he said.

Shell Chief Financial Officer Simon Henry said that this year's drilling operation would cost more than $1 billion, if it goes ahead. And if the operation cannot proceed, it will still cost nearly $1 billion, because of Shell's commitment to retain the fleet of ships that it needs for the drilling, Henry said. Henry said that, given the cost of Shell's Alaska venture and the company's total planned capital expenditure of $4 billion on worldwide exploration in 2015, spending outside Alaska would be limited to $3 billion, a reduction from 2014 spending levels.

In the Chukchi Sea, Shell plans to drill in its Burger prospect, about 80 miles offshore the western end of the North Slope, using two drilling vessels: the Noble Discoverer and the Polar Pioneer. Burger contains a known major natural gas pool, but Shell thinks that the structure is also likely to hold oil.

- ALAN BAILEY

See story in Feb. 1 issue, available online Friday, Jan. 30 at www.PetroleumNews.com

Conoco slowing Mooses Tooth pace

ConocoPhillips Alaska said today that it is slowing the pace of investment on the Greater Mooses Tooth 1 project in the National Petroleum Reserve-Alaska.

"We are deferring the final investment decision for GMT1," ConocoPhillips Alaska President Trond-Erik Johansen said in a statement. "The project is challenged by permitting delays and requirements, as well as the current oil price development. In 2015, we will continue to shoot seismic over the GMT1 area and progress engineering."

The Bureau of Land Management issued a final supplemental environmental impact statement for GMT1 in October, and while BLM's preferred alternative includes a road, the road and pad are not ConocoPhillips' preferred alternative. BLM has yet to issue a record of decision.

The U.S. Army Corps of Engineers, however, issued its record of decision and wetlands permits in January, and chose the ConocoPhillips' alternative as its environmentally preferred alternative and the lease environmentally damaging practicable alternative. ConocoPhillips said when the Corps' decision was issued that BLM's mitigation measures "must be acceptable in order for the project to move forward for consideration by our senior management."

BLM has yet to issue its record of decision.

- KRISTEN NELSON

See story in Feb. 1 issue, available online Friday, Jan. 30 at www.PetroleumNews.com

AIDEA buying LNG, goal affordable gas for Interior

AIDEA said yesterday that, in conjunction with Gov. Bill Walker, it has signed a letter of intent to purchase Pentex Alaska Natural Gas Co. LLC and its assets, including Fairbanks Natural Gas.

The Alaska Industrial Development and Export Authority said if its board approves the $52.5 million purchase, the investment would enable it to "effectively advance the goal of bringing affordable natural gas to Interior Alaska."

FNG delivers trucked liquefied natural gas from Cook Inlet to Fairbanks, serving some 1,120 customers.

A second gas distribution utility, the Interior Gas Utility, certified by the Regulatory Commission of Alaska in late 2013, will serve customers in both Fairbanks and North Pole, beginning with deliveries in North Pole in 2016 and expanding its distribution system to serve as many as 12,000 customers by 2027.

Gov. Bill Walker said, "It is important that we keep our eye on the immediate goal of bringing energy relief to Interior Alaska. AIDEA's initiative to help streamline gas distribution systems in the Interior is a positive development."

- KRISTEN NELSON

See story in Feb. 1 issue, available online Friday, Jan. 30 at www.PetroleumNews.com

EPA issues NPDES permit for Chukchi and Beaufort seas

The Environmental Protection Agency has issued a new general permit for wastewater discharges from geotechnical survey operations in federal waters of the Beaufort and Chukchi seas, the agency announced today. The permit authorizes 12 types of wastewater discharge from oil and gas geotechnical surveys and related activities. EPA says that effluent limitations and requirements specified in the permit will ensure that discharges do not unreasonably degrade the marine environment.

After EPA first released a draft version of its proposed new permit in November 2013, the large number of comments on the permit triggered a redraft and some subsequent extensions to the public comment period.

The new permit goes into effect on March 2 and expires on March 1, 2020, EPA says.

- ALAN BAILEY

See story in Feb. 8 issue, available online Friday, Feb. 6 at www.PetroleumNews.com


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