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Vol. 17, No. 36 Week of September 02, 2012
Providing coverage of Alaska and northern Canada's oil and gas industry

Interior gives go-ahead for Shell’s preparatory drilling in Arctic

The Bureau of Safety and Environmental Enforcement, or BSEE, has issued a permit allowing Shell to do some preparatory drilling above any oil bearing zones in the Chukchi Sea without the company’s oil containment barge being deployed, the agency announced Aug. 30. The permit will allow Shell to drill the so-called mudline cellars that house the seafloor wellheads and to set the first two strings of casing into shallow non-oil-bearing zones.

“It is our highest priority that any activities that occur offshore Alaska be held to the highest safety, environmental protection, and emergency response standards,” said James Watson, director of BSEE when announcing the permitting decision. “Shell’s applications for permits to drill into potential oil reservoirs remain under review, and Shell will not be authorized to drill into areas that may contain oil unless and until the required spill containment system is fully certified, inspected, and located in the Arctic. Today’s announcement authorizes Shell to move forward with limited activities well short of oil-bearing zones that can be done safely now prior to the certification and arrival of the containment system.”

“The administration’s decision to approve initial drilling into non-oil-bearing zones in the Chukchi Sea reflects the national importance of understanding the energy resource offshore Alaska,” said Shell spokesman Curtis Smith in an email responding to the BSEE announcement. “Shell is now only days away from responsibly beginning this critical exploration project and, once again, making energy history offshore Alaska.”

The permit apparently applies to a single well in the Chukchi Sea Burger prospect.

Shell: extremely exciting

“Today’s announcement is extremely exciting. We’ve been waiting for this for about six years and our goal of … being able to drill in the Chukchi is about to take place,” said Shell’s Alaska Vice President Pete Slaiby during a hastily convened Shell press conference shortly after the BSEE announcement.

The new permit will allow Shell to drill to a depth of 1,300 to 1,400 feet, 4,000 feet or so above the highest zones with hydrocarbons Slaiby said.

The drillship Noble Discoverer departed Dutch Harbor in the Aleutian Islands on Saturday Aug. 25, heading for the Chukchi Sea in preparation for the start of Shell’s exploration drilling. The drillship should arrive on site on the evening of Aug. 31, Slaiby said.

“When the Noble Discoverer reaches its respective drill site, it will connect with anchors that have been pre-staged in the Chukchi Sea and drilling will commence,” Smith said.

Drilling could start early next week, Slaiby said.

The journey north for the Noble Discoverer has not been without incident. On Aug. 29, when 68 miles west of Nome, the vessel’s crew had to call for assistance from the U.S. Coast Guard when a crew member started suffering from an irregular heartbeat. The Coast Guard dispatched a helicopter from the Cutter Alex Haley, anchored off Nome, and medevac’d the man from the drillship by a helicopter. An air ambulance transported the man from Nome to a hospital in Anchorage.

Shell’s floating drilling platform, the Kulluk, departed Dutch Harbor for the Beaufort Sea on Aug. 20. There is a blackout on Beaufort Sea drilling while subsistence whale hunting is in progress — the Kulluk should arrive outside the blackout zone around Sept. 4 and will wait there until the end of the hunt, Slaiby said.

Containment barge

Shell’s oil containment barge, the Arctic Challenger, is still in Bellingham, Wash., awaiting completion of a refit with Shell’s new Arctic oil containment system and the subsequent U.S. Coast Guard certification of the vessel. The containment barge would be used to draw off oil from a subsea well in the unlikely event of a well blowout. Approval of Shell’s permits for drilling into potential oil-bearing zones depends on deployment of the containment barge.

Some design issues with the barge did not surface until quite late in the refit, Slaiby said.

“We’ve never built one of these things before,” he said.

Shell has also proposed to the Department of the Interior that the permitted end date for the Chukchi Sea drilling program be extended. Following the delays to the start of the drilling and the consequent shortening of the drilling season, Shell has already cut its 2012 drilling plans to a single well in the Chukchi Sea and a single well in the Beaufort Sea — the company had originally planned to drill up to three wells in the Chukchi and up to two wells in the Beaufort.

Slaiby said that, without an extension to the drilling season, it would now be very difficult to complete a Chukchi Sea well this year.

Sept. 24

According to a Bureau of Ocean Energy Management Dec. 16, 2011, letter to Shell, approving the company’s Chukchi Sea exploration plan, the last day of this year’s drilling season in which a Shell Chukchi Sea rig can drill into a zone capable of flowing liquid hydrocarbons will be Sept. 24 — Shell can continue any other operations associated with its drilling program until Oct. 31. The company has asked to extend the Sept. 24 deadline by nearly two weeks.

Presumably in the interests of allowing time for the drilling of a relief well in the event of a loss of well control, BOEM had set a condition that drilling into an oil-bearing zone cannot take place within 38 days of the likely date at which sea ice would encroach the drilling site. And the agency had estimated from satellite data for 2007 to 2011 that Nov. 1 would be the likely date when ice would first appear at the site in 2012. Hence the Sept. 24 date for the drilling restriction.

However, the letter of approval also said that BOEM’s regional supervisor for leasing and plans may “revise its method for determining the trigger date based upon changes to best available scientific information.”

Apparently Shell’s forecasting models indicate that Chukchi Sea ice will start to form for the winter later than was previously thought.

Meantime, the Environmental Protection Agency has remained silent over a request by Shell to modify the air permits for the Noble Discoverer and the Kulluk. Under the terms of the Kulluk’s permit, the Kulluk will be able to operate, pending an EPA ruling on the requested permit modification. However, the Noble Discoverer cannot drill without permission from EPA. Slaiby said that Shell is confident of obtaining a compliance order from the agency, to enable the drilling of a Chukchi Sea well this year. The requested permit changes are minor in nature and are designed to ensure that the permit conditions can be consistently met, he said.

“This does not materially impact anything anyone will see on this permit,” Slaiby said.

—Alan Bailey

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