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Vol. 15, No. 16 Week of April 18, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Another step for Shell

EPA issues air quality permit for Shell’s Beaufort Sea drilling operations

Alan Bailey

Petroleum News

Another piece of the permitting jigsaw puzzle for Shell’s long-sought but much frustrated plans for drilling on Alaska’s Arctic outer continental shelf slotted into place April 9, when the U.S. Environmental Protection Agency announced the issuance of an air quality permit for Shell’s proposed drilling operations in the Beaufort Sea.

Shell plans to use the drillship Frontier Discoverer to drill one well in its Torpedo prospect and another well in its Sivulliq prospect during the 2010 open water season and had applied for a major air quality permit for its drilling fleet. Both prospects are in the Beaufort Sea on the west side of Camden Bay, east of Prudhoe Bay.

“This permit ensures that exploration and drilling will occur in a way that protects air quality,” said Rick Albright, director of EPA’s air, waste and toxics office in Seattle, when announcing the issuance of the permit. “We’ve listened closely to the Arctic communities of Kaktovik, Nuiqsut and Barrow in our effort to craft a permit that is both effective and enforceable.”

Any final petitions from people who filed comments on an earlier proposed permit are required by May 12.

Follows Chukchi permit

The Beaufort Sea air quality permit comes on the heels of a similar permit for Shell’s planned Chukchi Sea drilling — EPA issued that permit on March 31. The company hopes to drill up to three wells in the Chukchi Sea in 2010.

“The issuance of our final Beaufort Sea air permit means we can continue to advance our exploration program with the ultimate goal of drilling in the Chukchi and Beaufort Seas in 2010,” said Shell spokesman Curtis Smith on April 9. “Although outstanding legal challenges remain, the arrival of a final Beaufort Sea air discharge permit allows us to dedicate all of our time and resources to putting blueprints in place for a safe, environmentally responsible drilling season.”

Under the terms of the permits, EPA will consider the Frontier Discoverer to be an emissions source during the period that the vessel is secured at a drilling site in a configuration that allows drilling operations to take place — at other times the vessel will be viewed as a regular ship plying the ocean. And EPA is taking account of emissions from support vessels within 25 miles of a drilling operation.

Shell is making a $25 million modification to the Frontier Discoverer, to install catalytic reducers to scrub engine exhaust, and the company has committed to the use of low-sulfur fuel in the diesel engines of all of the vessels in its drilling fleet.

Working to mobilize

Shell’s 2010 exploration plans call for the arrival of the company’s drilling fleet in the Chukchi Sea at the beginning of July, for transit to the Beaufort Sea as the winter sea ice recedes northward. And at the end of March Peter Slaiby, Shell’s Alaska vice president, told Petroleum News that his company was still working towards mobilizing its drilling fleet for the summer operations.

The company’s plans gained impetus on March 31 when the U.S. Department of the Interior announced that it was upholding the contested 2008 Chukchi Sea lease sale in which Shell purchased its Chukchi Sea leases. The status of the sale had been in question since April 2009, after the United States Court of Appeals for the District of Columbia had upheld an appeal against the U.S. Minerals Management Service 2007-12 outer continental shelf lease sale program, the five-year program that includes the Chukchi Sea sale. The court required Interior to rework its Alaska environmental analysis for the sale program and Interior has now completed that rework.

The revised program is going through a 30-day public review period before a final Interior decision, at which point the agency will presumably ask the D.C. court to reconsider its 2009 ruling.

Other litigation

There is also a separate appeal in the U.S. District Court for the District of Alaska against the 2008 Chukchi Sea lease sale, and the judge in that case has yet to hear oral arguments. And in the U.S. Court of Appeals for the 9th Circuit the Native Village of Point Hope and several environmental organizations have appealed the MMS approval of Shell’s Chukchi Sea exploration plan, while in the same court environmental organizations have appealed the approval of Shell’s Beaufort Sea exploration plan.



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