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Vol. 15, No. 42 Week of October 17, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Draft Chukchi SEIS out

BOEM addresses issues raised by District Court in appeal over lease sale EIS

Alan Bailey

Petroleum News

In response to a July order by the U.S. District Court for Alaska, the Bureau of Ocean Energy Management, Regulation and Enforcement has issued a draft supplemental environmental impact statement for the 2008 Chukchi Sea outer continental shelf lease sale. The supplemental EIS addresses what the District Court had identified as deficiencies in the original lease sale EIS.

The new document supports the holding of the 2008 lease sale but, in announcing the document’s publication, BOEM Director Michael Bromwich expressed caution regarding his agency’s future policy towards oil and gas development in the Alaska offshore.

“Alaska’s coastal waters hold rich fisheries and marine mammal communities, and environmental resources that support tourism and sustain Alaska Native nations, as well as significant oil and gas reserves,” Bromwich said. “These frontier areas need additional scientific, environmental and spill risk analysis before any determinations are made as to future leasing and permitting. This draft SEIS, which follows a careful review of the issues raised by the U.S. District Court for Alaska, is a step in that process, but more review is yet to come that looks at the Arctic region as a whole.”

BOEM is accepting public comments on the draft document until Nov. 30.

Incomplete

In its July order, the District Court upheld an appeal by the Native Village of Point Hope, the Inupiat Community of the Arctic Slope and 12 environmental organizations against the original lease sale EIS, with the court saying that the EIS was incomplete, not having considered the environmental impacts of natural gas development in the Chukchi Sea. The court also said that BOEM had failed to adequately consider the relevance and availability of environmental data missing from the EIS.

The court required BOEM to rectify the deficiencies in the EIS and meantime placed an injunction on any lease-related activity by companies that had bought leases in the lease sale. Those companies include Shell, ConocoPhillips and Statoil, with Shell also being frustrated in its plans to drill in the Chukchi Sea as a consequence of a U.S. Department of the Interior ban on Arctic outer continental shelf drilling, following the Deepwater Horizon disaster in the Gulf of Mexico. All three companies have conducted Chukchi Sea seismic surveys.

Natural gas development

In addressing the question of possible Chukchi Sea natural gas development, BOEM has included within the supplemental EIS many sections of text that would augment the original EIS.

In, for example, the EIS section titled “Issues considered but not analyzed,” the agency has discounted any likelihood of transporting natural gas from the Chukchi Sea by tanker, saying the construction of a gas pipeline across the National Petroleum Reserve-Alaska to a future North Slope gas line from Prudhoe Bay would be the probable mechanism for exporting Chukchi Sea gas.

“No LNG ships have been built to handle severe ice conditions common in the Chukchi. Nearshore areas are relatively shallow and water depth could limit the size of LNG ships,” the SEIS says.

And a strategy of loading LNG tankers directly from offshore platforms would “face numerous economic, engineering and regulatory challenges,” the SEIS says.

The SEIS says that the economics of gas production are much less attractive than those of oil production, and that gas production would probably be delayed until most recoverable oil had been produced from a Chukchi Sea oil field. The gas production would use the same field infrastructure, wells and seismic surveys as oil production, although a subsea pipeline would be required to carry the gas to shore facilities, probably near the Chukchi Sea coastal village of Wainwright.

No oil spill from gas

In preparing the SEIS, the BOEM analysts chose not to evaluate information gleaned from the Deepwater Horizon incident because natural gas development does not pose any oil spill risk. Moreover, for oil exploration and development, the original EIS had already considered the possibility of an oil spill from a well blowout; the Deepwater Horizon incident did not change the baseline environmental conditions in the Chukchi Sea; and “the Chukchi Sea Planning Area is predominantly shallow water,” the SEIS says.

And, on the grounds that the Department of the Interior has no authority over oil or gas consumption, BOEM also excluded from consideration the greenhouse gas emissions resulting from the ultimate use of natural gas from the Chukchi Sea.

Negligible impacts

In general, the SEIS concludes that the development and production of natural gas from the Chukchi Sea would have negligible environmental impacts beyond the impacts of oil development.

“The natural gas development scenario would merely extend the viable life of existing plays and infrastructure and build new facilities within previously disturbed areas,” the SEIS says. “Overall, natural gas production and development would not pose any new types of impacts (short- or long-term) in addition to those posed by preceding oil activities.”

The SEIS also says that routine activities associated with oil and gas development would have no significant cumulative impacts on wildlife, subsistence hunting or local socio-cultural systems, although close attention must be paid to mitigation practices for impact limitation. However, the SEIS acknowledges that a large offshore oil spill could have major adverse impacts on the region, especially impacts on subsistence resources.

Missing information

To address the District Court’s concerns about the need to consider the significance of missing information about the Chukchi Sea environment, BOEM analysts located every statement in the original EIS that acknowledged a lack of environmental information. However, in each case, the analysts determined either that the missing information had no relevance to potentially significant environmental impacts, or that the information was not needed for the EIS decision making.

On Oct. 12 a group of organizations involved in the appeal against the EIS issued a statement, accusing the BOEM Alaska office of repeating the past mistakes of the U.S. Minerals Management Service by “rushing out a new justification for the Chukchi Sea lease sale” without first filling in what the organizations characterized as hundreds of gaps in critical knowledge about the region’s pristine waters.

“We are dismayed that the agency has rushed out an incomplete analysis that does not fill any of the gaps found in the 30 pages of material where the federal government admitted enormous data gaps about basic biology and habitat use of endangered whales, threatened polar bears, walrus, seals, sea birds, migratory birds, fish and other species that live in the Arctic Ocean,” the organizations said.



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