On May 11 the Bureau of Ocean Energy Management announced its conditional approval of Shell’s plan to drill up to six exploration wells in the Chukchi Sea, starting this year. The company wants to search for oil in the Burger prospect, about 70 miles northwest of the Chukchi coastal village of Wainwright. The BOEM approval is subject to several conditions, including Shell obtaining all of the permits needed for its operations and the company complying with the requirements of the Marine Mammals Protection Act and the Endangered Species Act.
“We have taken a thoughtful approach to carefully considering potential exploration in the Chukchi Sea, recognizing the significant environmental, social and ecological resources in the region and establishing high standards for the protection of this critical ecosystem, our Arctic communities, and the subsistence needs and cultural traditions of Alaska Natives,” said BOEM Director Abigail Ross Hopper. “As we move forward, any offshore exploratory activities will continue to be subject to rigorous safety standards.”
James Kendall, BOEM Alaska regional director, commended the team effort involved in reviewing Shell’s exploration plan.
“We’d like to thank the experts in our cooperating agencies, the tribal government representatives who took time out from their busy schedules to do government-to-government consultations and of course the many members of the public and stakeholder organizations who provided us with valuable comments during the review process,” Kendall said.
Other approvals
Shell hopes to start moving its drilling fleet into the Chukchi in early July, with the approved exploration plan being a key requirement for implementing the drilling program. Among the permits and approvals that Shell still needs are permits to drill from the Bureau of Safety and Environmental Enforcement. Shell has also applied to the National Marine Fisheries Service for approvals for the minor unintended disturbance of marine mammals during the company’s operations.
The Department of the Interior says that it is undertaking an ambitious program to strengthen and modernize its outer continental shelf energy regulations, with the release of proposed new drilling safety rules and proposed new safety standards for Arctic exploration. Many features of the new Arctic standards have been included as conditions that Shell must comply with in its Chukchi Sea drilling, BOEM says.
But, as has become the norm in the long saga of Shell’s recent efforts to explore in the Alaska Arctic offshore, reactions to BOEM’s decision have been highly polarized, between those who support Arctic offshore development and those who view Shell’s planned operations as posing too high an environmental risk.
Support from lawmakers
Alaska lawmakers, seeing Shell’s program as having high economic value both for the state and for the nation, have expressed their strong support for BOEM’s decision.
“Approval of Shell’s exploration plan for Alaska’s Chukchi Sea marks another important step toward the United States assuming a leadership role in the Arctic,” said Sen. Lisa Murkowski, R-Alaska, chair of the Senate Energy and Natural Resources Committee. “With an estimated 25 percent of the world’s undiscovered conventional oil and gas resources and active exploration by countries like Russia, it’s critical that we move forward as a nation and set the standard for responsible development in the Arctic.”
Murkowski stressed the importance of federal agency collaboration, to ensure that conditions imposed by permits are workable.
“With this latest milestone, I am cautiously optimistic and stand ready to continue working with the agencies to ensure exploration is conducted safely for the maximum benefit of Alaskans and our nation,” Murkowski said.
“I’m pleased to hear that the Department of Interior conditionally approved Shell’s revised Chukchi Sea exploration plan,” said Sen. Dan Sullivan, R-Alaska. “As I said to Department of Interior Secretary Sally Jewell during a February meeting, the federal government needs to work with the states and with private industry to unleash our country’s enormous economic potential and become the world’s energy super-power. For years, the Obama administration has stymied efforts to achieve this important national goal through regulatory delays and restricting access to federal lands in Alaska. I hope that this announcement is a new approach by the federal government.”
Environmentalist opposition
Environmental organizations hold a different perspective.
“Once again, our government has rushed to approve risky and ill-conceived exploration in one of the most remote and important places on Earth,” said Susan Murray, Oceana deputy vice president, Pacific. “Shell’s need to validate its poorly planned investment in the U.S. Arctic Ocean is not a good reason for the government to allow the company to put our ocean resources at risk. Shell has not shown that it is prepared to operate responsibly in the Arctic Ocean, and neither the company nor our government has been willing to fully and fairly evaluate the risks of Shell’s proposal.”
“The Interior Department has continually paved the way for Shell to drill this summer and today’s hasty decision is no different. The Obama administration has greenlighted Shell’s risky and dirty Arctic Ocean drilling plans - coming to this latest decision only weeks after opening Shell’s plans for public comment,” said Cindy Shogan, executive director, Alaska Wilderness League.
Litigation
BOEM’s decision to approve Shell’s exploration plan came after a lengthy delay in the agency’s completion of its review of the plan, a delay that resulted from a long-running appeal in federal court by environmental organizations over the legality of the lease sale in which Shell purchased its Chukchi Sea leases. In the latest twist in that appeal case, the federal District Court in Alaska had mandated a rework of the environmental impact statement for the lease sale, with that rework to be followed by a new record of decision for the sale.
Although BOEM was able to review Shell’s exploration plan after the company filed the document in August of last year, the agency was not allowed to issue a formal decision on the completeness of the plan, nor make a plan approval decision, until after Interior’s new record of decision had been issued. In the event, BOEM issued its revised supplementary environmental impact statement for the lease sale in February and at the end of March Interior issued its record of decision, affirming the sale.
It is not clear what will happen next in the lease sale appeal. On May 4 District Court Judge Ralph Beistline issued an order requiring parties in the case to file on or before June 1 either a proposed briefing schedule for the case or an updated status report.
Meantime, an appeal challenging Shell’s Chukchi Sea oil spill prevention and response plan has yet to be resolved. A panel of judges in the Court of Appeals for the 9th Circuit heard oral arguments in this case in August 2014 but has remained silent since then - a decision in the case could appear at any time.
The Burger prospect
The Burger prospect that Shell is targeting is a dome-shaped geologic structure 25 miles in diameter. Following the drilling of a single well into the structure by Shell in 1989-90 during an earlier phase of exploration, geologists know that the structure holds a large natural gas resource, estimated in a range of 8 trillion to 27 trillion cubic feet, in sandstone broadly equivalent to the reservoir sands of the Kuparuk River oil field in the central North Slope. Shell is now betting on the presence of oil, presumably under the gas, in the Burger structure.
Nobody knows whether the oil is actually there. However, Shell has conducted high resolution seismic surveying across the structure and, while seismic cannot detect oil, the company has said that it thinks that there is likely to be oil in the prospect. If so, the oil pool could be very large.
When Shell last drilled in the Chukchi, in 2012, the company was only able to drill the top hole section of a single new Burger well, having had to terminate the drilling because its Arctic containment dome, a key new piece of its oil spill response capabilities, had not been ready in time for deployment, having failed some operational testing. The company has successfully tested the dome ahead of this year’s planned program - the company anticipates stationing the dome on the barge Arctic Challenger in Kotzebue Sound. As part of its extensive oil spill prevention and response kit, Shell also has a capping stack, to seal a well head should a well blowout preventer fail.
This year Shell plans to tackle its Burger drilling with the simultaneous use of two drilling units, the drill ship Noble Discoverer and the semi-submersible drilling rig Transocean Polar Pioneer. In addition to conducting the drilling, each rig will act as a backup to the other, should a well loss-of-control incident require the drilling of a relief well to plug a problem well bore.
