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NEWS BULLETIN

December 16, 2011 --- Vol. 17, No. 107December 2011

North Slope Borough issues Repsol’s drilling permits

Last night in Nuiqsut the North Slope Borough’s Planning Commission approved Repsol’s drilling permits for the coming winter exploration season.

In response to concerns from local residents, Repsol had pulled its permit request for Q-3 pad prior to the Nuiqsut hearing, reducing its pads from five to four and probable wells from 15 to 12 (one vertical and two laterals from each pad).

One concession the company made at the hearing was not to have more than three rigs drilling working at one time, so drilling operations will be completed at K-1 before drilling starts at the offshore pad, Q-4.

—Kay Cashman

BOEM issues conditional approval for Shell Chukchi Sea drilling

The Bureau of Ocean Energy Management today issued conditional approval for Shell’s plan to drill up to six exploration wells in the Alaska Chukchi Sea, starting in the 2012 open water season. However, the agency has placed a number of conditions on its approval, including a requirement that Shell stops any drilling activities into potential oil bearing zones within 38 days of a projected date of first ice encroachment in the area of the drilling. BOEM says that this stipulation will assure “a greater opportunity for response and cleanup in the unlikely event of a late season oil spill.”

For 2012 BOEM’s projected date of ice encroachment is Nov. 1. So, with Shell having said that it anticipates continuing drilling into late October, depending on weather and ice conditions, the BOEM stipulation appears to cut 38 days from the end of Shell’s planned drilling season.

And prior to the commencement of any drilling Shell must demonstrate to BOEM that its contingency arrangements for relief well drilling comply with federal regulations.

Other requirements for Shell to proceed with its drilling include having an approve oil spill prevention and response plan, and a permit to drill for each well.

“Our scientists and subject matter experts have carefully scrutinized Shell’s proposed activities,” said BOEM Director Tommy Beaudreau in announcing the conditional approval. “We will continue to work closely with agencies across the federal government to ensure that Shell complies with the conditions we have imposed on its exploration plan and all other applicable safety, environmental protection and emergency response standards.”

“The conditional approval of Shell’s revised Chukchi Sea exploration plan is an important step towards our goal of drilling our Chukchi leases starting in July of next year,” said Shell spokesman Curtis Smith in response to today’s announcement. “Our Chukchi acreage makes up a significant portion of our Alaska investment portfolio and we look forward to validating the confidence we have in this highly prospective area. We are still evaluating the conditions outlined in the approval, including the stipulation that potentially limits the duration of Shell’s Chukchi drilling season. We are concerned this unwarranted restriction could severely impact our ability to deliver a complete Chukchi program. Shell remains committed to employing world-class technology and experience to ensure the delivery of a safe, environmentally responsible Arctic exploration program – a program that has the potential to create over 50,000 jobs and deliver new, domestic supplies of energy for decades to come.”

—Alan Bailey

See full stories in Dec. 25 issue, available online at 11 a.m., Friday, Dec. 23, at www.PetroleumNews.com.

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