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Vol. 15, No. 3 Week of January 17, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Chukchi air permit takes Shell closer to 2010 drilling program

The U.S. Environmental Protection Agency’s Jan. 7 decision to propose an amended air quality permit for Shell’s planned exploration drilling in the Arctic Alaska outer continental shelf of the Chukchi Sea marked a significant step towards the point at which the company can make a go/no-go decision on whether to drill in the Chukchi during the 2010 open water season.

“We very much appreciate the work done by EPA Region 10 to issue Shell a draft air permit for our 2010 Chukchi drilling program,” said Shell Alaska Vice President Pete Slaiby on Jan. 7. “The issuance of this draft permit starts the clock on a critical timeline of events that will ultimately determine if we can explore our Alaska leases in 2010.”

Shell plans to drill up to three exploration wells in the Chukchi Sea in 2010, and the company applied for a major prevention of significant deterioration air quality permit, rather than a minor permit, for the drilling. Shell is making a $25 million modification to the Frontier Discoverer, the drillship that the company plans to use for the drilling, to install catalytic reducers to scrub the engine exhaust and thus reduce the emission of pollutants by more than 90 percent. And the company has committed to the use of low-sulfur fuel in the Frontier Discoverer’s diesel engines.

Public comments

But with the public comment period on the new proposed air quality permit due to end on Feb. 17, Shell must still wait for another few weeks before EPA can finally issue the permit.

“While today’s announcement is good news, the length of the public comment period combined with likely appeals still pushes the boundaries of our ability to drill in 2010,” Slaiby said. “Obviously, the windows in which we have to operate are limited and a decision to move forward is an extremely expensive one. We will continue to monitor our options in the days ahead as we get closer to making that critical decision.”

Alaska politicians expressed cautious satisfaction at the EPA decision.

“The EPA’s decision to approve an air-quality permit for Shell’s Chukchi Sea exploration has been a long time coming,” said Sen. Lisa Murkowski Jan. 7. “Today’s decision represents progress. While several additional hurdles remain, the agency’s action offers some reassurance that exploration for oil and gas resources off Alaska’s coast will be allowed to proceed.”

“Alaska has long been America’s energy storehouse and a green light on this Shell development means Alaska’s energy will continue to help fuel our nation’s factories and automobiles,” Sen. Mark Begich said. “It has become increasingly clear that energy policy is national security policy, and the U.S. needs to focus more on production of our rich energy resources right here at home. Let’s stop paying billions a year to hostile countries and start putting Alaskans to work.”

Modified permit

EPA originally published a proposed air quality permit in August for Shell’s Chukchi Sea drilling. However, following a public comment period, the agency decided to modify the permit, to reflect some of the comments that the agency received.

Major changes to the permit issued in August will result in allowed emissions of particulate matter being reduced from 184 tons per year to 52 tons per year, and a reduction in allowed sulfur dioxide emissions from 181 tons per year to less than 2 tons per year, EPA said. And among a series of changes to the air emissions stipulations, the permit now requires catalytic diesel particulate filters on engines in the oil spill response vessel planned to stand by the Shell drilling operations, as well as tighter limits on the incineration of waste in the Frontier Discoverer.

Previous air quality permitting for Shell’s planned Alaska outer continental shelf drilling operations raised questions regarding what constitutes an outer continental shelf emissions source, for the purpose of determining the quantity of emissions that the operations would generate: The broader the definition of the source, the greater the amount of emissions that would fall within the scope of the permit.

The new proposed permit offers two alternative definitions of the regulated emissions source, with an invitation for the public to comment on which of these definitions would be more appropriate. One definition would consider the Frontier Discoverer to be an outer continental shelf source for the period during which it is attached to the seabed by at least one anchor at a specific drill site; the other definition would consider the vessel to be a source during the period that the vessel’s crew has determined the vessel to be sufficiently stable and secure to carry out drilling at the site.

These definitions reflect the way in which the Frontier Discoverer is stationed to drill a well.

Drilling turret

Essentially, the drillship has a drilling turret that enables the ship’s hull to rotate into the wind or ice while the drilling rig remains in a fixed position over a well location. The drilling turret is anchored to the seafloor, with the assistance of an anchor handling vessel, using eight mooring lines extending radially from the vessel.

EPA’s regulations say that a vessel is considered to be an OCS emissions source only if permanently or temporarily attached to the seabed, “erected thereon,” and used for the purposes of exploring, developing or producing resources from the seabed, EPA said.

And, although the use of a single mooring anchor might be sufficient to constitute attachment to the seafloor, “erected thereon” may imply the placement and tensioning of enough anchors to render the vessel sufficiently stable for drilling, the agency said.

The U.S. Minerals Management Service told EPA in December that MMS does not consider a drillship such as the Frontier Discoverer to be permanently or temporarily attached to the seabed until all anchors have been set, with the vessel being operated under and “subject to maritime laws and practices” at other times, EPA said.

But the supply vessel that services the drillship will also be considered an OCS emissions source when physically attached to the drillship.

Other vessels in Shell’s drilling support fleet are not considered to be OCS sources, although the emissions from these vessels when within 25 miles of the drillship need to be added into the overall emissions inventory for the drillship, EPA said.

—Alan Bailey

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