Shell says no Beaufort oil drilling in 2008

Even if the U.S. Court of Appeals gives Shell approval to drill oil exploration wells in Alaska’s Beaufort Sea this year, the company has decided not to do any "critical" drilling in 2008, Shell’s Alaska operations manager Susan Moore said Feb. 14.

The company’s spokesman in Alaska, Curtis Smith, told Petroleum News that Shell’s decision was based on “the availability of drilling assets” combined with a response to “repeated requests that we take a measured approach to exploring the Alaska offshore.”

However, the company does plan to drill some shallow wells, termed “top-hole wells,” that would not go deep enough to penetrate hydrocarbon reservoirs. Shell has been discussing its plans with regulators, Moore said.

“Basically it’s preparatory work that would take place at the Sivulliq prospect,” Smith said, referring to the prospect that used to be called Hammerhead and which lies offshore the North Slope, due north of Flaxman Island on the western side of Camden Bay.

“Top-hole wells typically extend (to depths of) 1,000 to 1,200 feet and provide structural support for the well as it grows in depth,” Smith said.

Essentially, a top-hole well is a mudline well cellar with a 30-inch and 20-inch casing string that establishes the well structure, isolates the permafrost and provides the well with structural integrity, Smith said.

Shell wants to use its Kulluk floating drilling platform to drill three of these wells at Sivulliq. But the Frontier Discoverer, the drillship that Shell had also contracted for Beaufort Sea drilling, will remain in Australia during 2008, he said.

Drilling top-hole wells “will give us a head start on our 2009 season, which we hope will be quite robust,” Smith said.

To drill the top-hole wells Shell will need permission of the U.S. Court of Appeals for the 9th Circuit because the company’s Beaufort operations remain on hold, pending the outcome of an appeal by the North Slope Borough, the Alaska Eskimo Whaling Commission and several environmental organizations against U.S. Minerals Management Service approval of Shell’s exploration plan. That appeal has resulted in a court injunction on Shell’s Beaufort drilling activities until the case is settled. The court heard oral arguments in the case in December but it is not clear when it will make a ruling.

“If we get the go-ahead from court and the permits we need, taking a more measured approach will help instill confidence with the stakeholders — demonstrate that we can operate safely and responsibly,” Smith said. “We’ll also get a chance to show off some of our technology.”

—Alan Bailey & Kay Cashman