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Vol. 15, No. 36 Week of September 05, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Listening to Alaska

Bromwich hears comments on Arctic OCS drilling safety and spill response

Alan Bailey

Petroleum News

Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement, was in listening mode when he appeared in Anchorage Aug. 26 at a BOEMRE forum to hear local views on Arctic Alaska offshore oil drilling safety and oil spill response. Bromwich is conducting a series of similar offshore drilling forums around the United States, to gather input on the issues that Interior says underlie the deepwater drilling moratorium that the agency has imposed for the U.S. outer continental shelf.

Bromwich said that he will report the findings from the forums to Interior Secretary Ken Salazar by Oct. 31, and possibly earlier than that.

And the stakes couldn’t be higher, as the U.S. Department of the Interior moves toward making some decisions about the future of offshore oil development, in the wake of the Deepwater Horizon disaster in the Gulf of Mexico.

On one hand, the United States wants to reduce its dependence on foreign oil, a commodity that the Alaska Beaufort and Chukchi seas would appear to hold in plenty. And many Alaskans, whose livelihoods depend on a vibrant oil industry, see offshore oil as a key to their future wellbeing. On the other hand, many questions have been raised about whether oil can be developed safely in the pristine and remote waters of the north. And Alaska’s Arctic Native communities worry about the potential impact of offshore oil development on their subsistence lifestyle.

In the Anchorage forum people invited to speak to Bromwich from a variety of backgrounds expressed markedly frank opinions on this difficult debate.

Murkowski: unjustified moratorium

U.S. Sen. Lisa Murkowski, R-Alaska, particularly focused on Interior’s outer continental shelf deepwater drilling moratorium which, she said, had “knowingly destroyed” more than 23,000 jobs and had been extended to suspend Shell’s planned drilling in the shallow waters of the Beaufort and Chukchi seas.

“This killed what would have been a critical exploration season this summer and sidelined some 600 Alaska jobs,” Murkowski said.

There has been no formal explanation of why Shell was dragged into this drilling moratorium and no documentation to justify the drilling suspension, Murkowski said. Delays in verifying industry compliance with new safety requirements are “beyond comprehension” and Interior’s actions in preventing offshore oil drilling violate the Outer Continental Shelf Lands Act, she said.

U.S. Sen. Mark Begich, D-Alaska, while stressing the importance Arctic development being done in a responsible manner, emphasized the need for urgency in moving ahead with the development of new Alaska oil resources, given the long lead time required to develop new oil fields and the danger of the trans-Alaska oil pipeline becoming uneconomic as production from existing fields runs down.

“The future and the responsibility of energy supply are here in Alaska,” Begich said. “And I want to emphasize very clearly … the timing and the urgency. … Set the rules. Let industry move forward. We know and we have proven that we can do development in Alaska in a responsible way.”

Point Hope opposition

Caroline Cannon, president of the Native Village of Point Hope, the tribal government for the Chukchi Sea coastal village of the same name, asked Bromwich to prevent any oil development in the Arctic offshore, a region that she characterized as her community’s garden and a vital source of subsistence food.

Oil industry activities pose a significant threat to the bowhead whale and other marine mammals and fish that feed the Arctic peoples, Cannon said. In particular, there is insufficient infrastructure to respond to an offshore oil spill in the region, and more environmental information is needed, she said.

“The assault on our garden … never stops,” Cannon said. “It is up to the administration to set aside the lease sale, halt exploration and drilling in our garden, and to stop gambling with the precious natural resources, by permanently protecting the Beaufort, Chukchi and Bering seas.”

Edward Itta, mayor of the North Slope Borough, expressed his community’s nervousness about change that is happening in the North Slope region.

“It’s affecting our ability to hunt whales in some years, and to us it appears it’s going to get worse before it gets any better,” Itta said. “As a people we are culturally dependent on our traditional subsistence whaling activities. … That is the nature of our being and that cannot change without causing a cultural crisis for our people.”

The borough has successfully worked with the oil industry onshore for many years but has been opposed to offshore development because of the potential impact on whale migration and subsistence resources, he said.

Concerns not addressed

When in 2006 the U.S. Minerals Management Service, the precursor federal agency to BOEMRE, did nothing to address the borough’s concerns about Shell’s exploration plans, the borough was forced to resort to litigation, Itta said.

“A primary concern was that MMS had determined that there was no significant impact that had not been appropriately mitigated,” Itta said. “We obviously felt otherwise.”

Both the U.S. Circuit Court for the District of Colombia and the Alaska District Court have rejected as inadequate the MMS environmental analysis for the 2008 Chukchi Sea lease sale, Itta said. And the General Accounting Office has issued a report criticizing the MMS Alaska office for not adequately using science to consider the potential impacts of oil development in the offshore, he said.

“We all should acknowledge that we’ve got to make some changes,” Itta said, while also commenting that litigation is in nobody’s interest as a means of resolving problems.

Itta said that he wants to see a world-class standard for environmental baseline measurement and other measures for Arctic offshore oil development, with that standard honoring the cultural needs of the Arctic communities.

But progress is stalled in the Arctic offshore program because the federal agency has not seriously listened to the local communities, Itta said.

“I am ready to cooperate in the development of a responsible Arctic OCS program and I’ve been working with industry to find common ground and we’ve had some success,” he said.

Shell prevention and response

Peter Velez, global emergency response manager for Shell International E&P Inc., told Bromwich that offshore oil spill response comes as a last resort, at the end of a series of steps that Shell takes to prevent the loss of control of an oil well during a drilling operation. Those steps include comprehensive well planning and risk identification; the remote monitoring of drilling operations while drilling is in progress; and the use of multiple barriers in a well, to seal off the well if necessary.

The company also has plans for curtailing a drilling operation in the event of adverse weather or sea ice moving into the area of the operation, Velez said.

“All those plans are in place for our operations,” he said.

Shell’s spill response fleet for on-site support of Arctic offshore exploratory drilling includes a dedicated oil spill response vessel, an oil spill response barge, a 500,000-barrel tanker, ice-management ships and several smaller boats, Velez said. Response equipment such as boom and skimmers is staged on the vessels and at onshore locations, he said.

“We have a system in place which is unprecedented,” Velez said. “… It’s ready to respond within one hour. It’s dedicated to our drilling operations.”

And, although Shell’s contingency plans cater for a worst-case spill, the company could mobilize additional equipment from elsewhere, flying that equipment in as necessary, he said.

Moreover, building on the experience of responders in the Gulf of Mexico, Shell is going to fabricate a dome system for placement on the seafloor, to contain oil from a leaking well and allow that oil to be recovered to a support vessel, he said.

If oil were to be spilled in Arctic seas, the cold temperatures would reduce evaporation rates and slow down the spread of oil on the water surface, thus aiding oil recovery efforts and minimizing the area of sea impacted by an oil slick, Velez said. And sea ice, although it could obstruct some oil spill response equipment, can act as a natural barrier to the movement of spilled oil, thus aiding in response efforts.

The shallow water in the Alaska OCS would limit the spread of oil from a leaking subsea well, minimizing the footprint of the spill and simplifying the application of dispersants, Velez said.

“There are not multiple current levels like there are in the Gulf of Mexico,” he said.

Weather concerns

Leslie Pearson, a contingency planning specialist, expressed concern about Shell’s ability to respond to an oil spill during inclement weather, saying that the company’s contingency plans assume that weather will not impact oil recovery capabilities.

“This is an extremely unrealistic assumption,” Pearson said.

Oil spill contingency planning requires a response gap analysis, identifying situations where a spill might occur but where an immediate response would not be possible, she said. That type of approach would not necessarily lead to a prohibition on oil development, but would lead to the recognition of needed spill mitigation techniques, she said.

And although the in-situ burning of oil would appear to be a viable response option in the Arctic, there have been few Arctic offshore oil spills to prove out Arctic response techniques.

“There’s relatively little real world data about the effectiveness of oil spill response systems in the Arctic,” Pearson said.

Marilyn Heiman, director for U.S. Arctic and offshore energy reform programs for the Pew Environmental Group, said that the Pew Group remains very concerned about oil spill response in extreme Arctic conditions, given the remoteness of the region and the lack of support infrastructure.

Environmental gateway

Dr. Michael Castellina, an expert on the impact of oil on animals and dean of the School of Fisheries and Ocean Sciences, University of Alaska Fairbanks, argued for more research into the potential movement of spilled oil in the Arctic offshore, to assess where the main stress points in the environment would occur after a spill. Independent scientific research through an organization such as the National Science Foundation is needed, with environmental studies becoming required gateways to oil leasing and drilling, he said.

“The primary question we have in all these issues … is how do you balance exploration economics, environmental impacts, social impacts, risk in Alaska,” Castellina said. “… Oil is important for the economy of the state. It’s important for the people and yet we’re trying to balance the risk and all the other aspects of exploration.”

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Bromwich says no Alaska moratorium

Currently there is no Department of the Interior moratorium that specifically bans oil drilling in the shallow water on the Alaska outer continental shelf, Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement, told reporters at a media briefing during a BOEMRE offshore drilling forum in Anchorage on Aug. 26.

“There’s not a moratorium per se on Alaska,” Bromwich said.

When in May, in the wake of the Deepwater Horizon disaster, the Department of the Interior imposed a six-month moratorium on deepwater drilling in the Gulf of Mexico, Interior also placed a hold on Arctic outer continental shelf drilling, thus nixing Shell’s plans for exploratory drilling in the Beaufort and Chukchi Seas in 2010. But Interior did not mention the Arctic in its notice to lessees for the deepwater moratorium. And water depths in the Arctic seas are substantially less than the 500-foot threshold for the drilling ban announced in May.

Then, following a court injunction against the moratorium, on July 12 Interior announced a new drilling moratorium that applied to all offshore drilling on the OCS requiring the use of a floating drilling rig and a subsea blowout preventer.

Again, there was no mention of the Arctic in the second moratorium, although the equipment specifications would appear to have applied to the drilling that Shell planned to carry out offshore.

And, at the Aug. 26 press conference, Bromwich stressed that equipment stipulations — rather than geographic location or water depth — determine which drilling operations are banned under the current moratorium. However, the equipment stipulations would typically only apply to deepwater drilling, he said.

“The new moratorium issued on July 12 is very clear on what it applies to,” Bromwich said. “Rather than using a depth analysis … it talks about certain types of equipment that are needed.”

—Alan Bailey