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Vol. 16, No. 22 Week of May 29, 2011
Providing coverage of Alaska and northern Canada's oil and gas industry

Chukchi sale EIS redone

New draft considers potential of ‘very large oil spill’; final required by Oct. 3

Eric Lidji

For Petroleum News

Federal regulators have released revised environmental documents for oil and gas leasing in the Chukchi Sea, a small step toward allowing exploration in Arctic waters.

The Bureau of Ocean Energy, Management, Regulation and Enforcement, or BOEMRE, released a revised draft on May 20 of its supplemental environmental impact statement for a February 2008 lease sale in the outer continental shelf of the Chukchi Sea where Shell, ConocoPhillips, Statoil and others purchased leases for oil and gas exploration.

“This Revised Draft SEIS offers additional scientific, environmental and technical analysis that will assist in future decisions pertaining to the leases issued in Sale 193 in the Chukchi Sea,” BOEMRE Director Michael R. Bromwich said in a statement. “Because of what is at stake, it is extremely important that we continue to make this a transparent process that encourages the maximum amount of public participation.”

The revision addresses several concerns about the document raised during legal proceedings last year, and also incorporates public comment gathered in recent months, looking in particular at the potential impact of a “Very Large Oil Spill” in the Chukchi.

BOEMRE is taking comments on the revised draft through July 11 and plans to hold public hearings this summer in Anchorage and in communities near the lease area.

U.S. District Court Judge Ralph Beistline recently set a deadline of Oct. 3 for BOEMRE to finish the supplemental EIS, a compromise between a Sept. 15 deadline requested by Shell — which can’t drill until the case is resolved — and a late October deadline requested by the U.S. Department of the Interior and plaintiffs in the case.

Sen. Lisa Murkowski, the ranking member of the Senate Energy and Natural Resources Committee, said she hoped the additional analysis would resolve the legal challenges around the Chukchi, perhaps even allowing Shell to drill next summer. “There’s still a lot of process yet to occur, but this is a step in the right direction,” she said in a statement.

Large spill ‘hypothetical’

In response to an appeal against the sale, the U.S. District Court for the District of Alaska in July 2010 ordered BOEMRE to rework some aspects of the original EIS. The court also banned lease related activities in the Chukchi until BOEMRE finished the new SEIS.

In particular, the court told BOEMRE to address three deficiencies in the original EIS: to consider the potential environmental impact of offshore natural gas development (distinct from oil development), to determine the relevance of environmental information missing from the EIS and to adequately assess the cost of getting that missing information.

BOEMRE released an initial draft SEIS in October, but after reviewing public comments it decided to add an analysis of a “Very Large Oil Spill,” or VLOS, in the Chukchi.

The original EIS considered the impact of a 1,500-barrel spill from a platform or a 4,600-barrel spill from a pipeline, but did not consider the impact of a “very large” spill, defined as 150,000 barrels of more, for two reasons: the court didn’t request it, and before the Deepwater Horizon explosion a spill of that size wasn’t “statistically foreseeable” and many of the conditions in the Gulf of Mexico “were not germane” to the Chukchi.

BOEMRE said the analysis of that very large spill is “based on the estimated size of an unlikely but possible oil spill resulting from a hypothetical blowout scenario.”

The analysis considers the impact of a spill on a variety of systems, from air and water quality, to fish and birds and animals, to plants and habitats, to communities located near the lease area, the same categories BOEMRE would consider in a typical EIS when analyzing the potential impacts of exploration and development on the environment.

VLOS hypothetical

That very large spill scenario caused a stir in early May when an internal BOEMRE memo describing the possibility of a 1.4 million barrel spill leaked to the public.

Then and now, BOEMRE described the VLOS scenario as a purely hypothetical one, not an analysis of any real-world well that any real-world operator intends to drill.

Operators must estimate and prepare for a worst-case spill in the proposed exploration plan they file before drilling begins. The size of that worst-case spill must is based on the specific depth, pressure, oil and anticipated reservoir properties for each proposed well.

The VLOS model is created using “similar assumptions and identical analytical methods” as the worst-case scenario in an exploration plan, but differs in a couple of ways.

First, the VLOS is a tool for analyzing potential environmental impacts, where the worst-case scenario included in an exploration plan is the basis for creating a response program.

Second, the VLOS model presents an “extreme case,” the largest possible spill in the lease area, not the largest spill likely from a specific well planned within the lease area. The worst-case scenario for a specific well is typically much smaller, BOEMRE said.

The VLOS scenario would require an explosion, a fire and “a loss of well control during exploration drilling that leads to a long duration blowout and a very large oil spill.” BOEMRE described that event as “unlikely,” but it resembles the Deepwater Horizon.

The scenario imagines a well initially flowing at 61,000 barrels per day, but falling to around 20,000 bpd over the first month as reservoir pressure declines. Over a 74-day period, the time needed to kill the leak in the slowest of three estimates, the VLOS scenario imagines the well discharging around 2.2 million barrels of oil altogether.

Drilling concerns remain

Those explanations and figures did little to alleviate concerns about Arctic drilling.

“This revised draft shows that such a spill could have catastrophic effects on the region’s species, such as the iconic polar bear as well as birds and whales,” Cindy Shogan, executive director of the Alaska Wilderness League, said in a statement that called for an additional halt to drilling until BOEMRE conducted additional environmental analyses.

Shogan also criticized BOEMRE for its conclusion that while much of the incomplete, missing and unavailable information in the original EIS was “broadly relevant to the important issues at hand, none were essential for a reasoned choice among alternatives.”

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