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Vol. 12, No. 31 Week of August 05, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

Two steps closer

Shell, whalers sign agreement, Beaufort Sea ACMP determination final

Alan Bailey

Petroleum News

Shell can check two more items off its to-do list for its planned 2007 Beaufort Sea drilling program. On July 24 the company finally signed a conflict avoidance agreement with the Alaska Eskimo Whaling Commission for the company’s 2007 open water exploration program. And on July 27 the commissioner of the Alaska Department of Natural Resources, Tom Irwin, upheld the Office of Project Management & Permitting’s Alaska Coastal Management Plan consistency determination, subject to some new conditions.

Shell plans to drill three wells in its Sivulliq prospect on the western side of Camden Bay during the 2007 open water season and has commissioned two drilling vessels, the Kulluk and the Frontier Discoverer, plus a fleet of support vessels for the drilling program.

But Native communities on the North Slope are concerned about the potential for the industrial activities to disrupt the annual subsistence hunt for marine mammals, in particular bowhead whales. The hunters think that industrial noise would deflect the whales from their normal migration paths through the Beaufort Sea.

Months of negotiation

In a final conflict avoidance agreement hammered out during the course of several months of negotiation, Shell has agreed to terms that will, among other things, ensure that the Cross Island whale hunt close to the planned drilling area can proceed unhindered. Under the agreement, Shell will only move one of its drillships, the Frontier Discoverer, into the Sivulliq area prior to the Cross Island whale hunt. The Frontier Discover will cease drilling operations on Aug. 25, move out of the Sivulliq area within two days and return with the Kulluk drillship after the end of the hunt.

“We are very glad that Shell has decided to recognize the risks to our bowhead whale resource, our bowhead whale subsistence hunt and the lives of our hunters,” said Harry Brower Jr., chairman of AEWC. “… We are facing many changes, especially from oil and gas, so we have to work together to protect our subsistence resources and our way of life.”

“Shell appreciates the considerable effort the Alaska Eskimo Whaling Commission has made in joining us to create a comprehensive plan of communications, mitigation and cooperation in the 2007 Conflict Avoidance Agreement,” Shell spokesman Curtis Smith told Petroleum News July 27. “Shell believes this agreement assures we are taking all reasonable precautions to avoid conflicts with subsistence activities vital to the people of the North Slope. We will work together to enable efficient oil and gas activity to take place while prioritizing the preservation of the Beaufort Sea marine mammal and hunting areas for the subsistence communities.”

NSB opposition

The North Slope Borough has consistently opposed offshore oil and gas exploration and development, because of concerns about potential impacts on subsistence hunting and possible environmental impacts. The borough has questioned the practicality of cleaning up an oil spill in ice-infested waters.

And, when Alaska’s Office of Project Management & Permitting proposed on June 19 a determination of consistency with the Alaska Coastal Management Plan for Shell’s drilling program, the borough requested elevation of that determination to the commissioner of the Alaska Department of Natural Resources. The borough expressed numerous concerns about the Shell program, including questions relating to waste disposal, the potential for an oil or fuel spill and OPMP’s ability to fairly evaluate the complete timeframe up to 2009 of the Shell operations.

On July 19 the DNR commissioner convened a meeting of interested parties, as part of the ACMP determination elevation process. That meeting resulted in three alternative measures that Shell must incorporate into its Beaufort Sea project description. And, subject to Shell incorporating those measures, the commissioner confirmed a final OPMP determination of ACMP consistency.

Concerns addressed

In his response to the North Slope Borough’s elevation request, Commissioner Irwin said that he believed that the alternative measures developed as a result of the July 19 meeting addressed the borough’s concerns and thus justified a final determination of ACMP consistency.

“I take this elevation very seriously and I regard the issues raised by the North Slope Borough as very important issues,” Irwin said. “I am grateful for the NSB’s willingness to share with us, as resource managers, its traditional knowledge regarding subsistence activities and bowhead whales. I also appreciate the NSB’s recognition of the importance of Shell’s proposed activities to the State of Alaska and the residents of the NSB, and NSB’s willingness to find a way to move forward.”

And Ed Fogels, acting director of OPMP, told Petroleum News Aug. 2 that the conflict avoidance agreement signed on July 24 had factored into the commissioner’s decision.

“That gave us a lot more comfort in the determination,” Fogels said.

Fogels commented that Shell had made a major concession in agreeing to suspend its operations during the Cross Island whale hunt.

“I find that Shell’s negotiated conflict avoidance agreement will avoid and minimize impacts to NSB’s subsistence uses,” Irwin said in his elevation response.

Alternative measures

The alternative measures that DNR now requires Shell to incorporate into its Beaufort Sea project consist of:

1. The adoption of a series of alternative measures stipulated by the Alaska Department of Environmental Conservation on July 25 relating to Shell’s oil discharge prevention and contingency plan. Shell must modify that plan in the light of any pertinent new information that emerges about Shell’s drilling plans in 2008 and 2009. DEC also wants to know about any changes in Shell’s contractual arrangements for oil spill response. Shell must include in its contingency plan a description of the methods to be used to remove residue from in-situ burning of spilled oil. And the North Slope Borough must be the designated local on-scene coordinator for oil spills.

2. The adoption of an adaptive management plan or conflict agreement with subsistence hunters for the 2007 drilling program, and a commitment to adopt similar plans for the 2008 and 2009 seasons.

3. An agreement to review the consistency determination for Shell’s 2008 and 2009 drilling programs, in the light of any changes to those programs, recognizing that experience gained in 2007 will likely impact the drilling program.

Necessary steps

The ACMP consistency determination is an essential requirement for final U.S. Minerals Management Service approval of Shell’s Beaufort Sea exploration plan; the company’s oil discharge prevention and contingency plan; and any necessary drilling permits.

The conflict avoidance agreement with the Alaska Eskimo Whaling Commission that has now been completed may enable the issue of marine mammal incidental take authorizations from the U.S. Fish and Wildlife Service and the National Marine Fisheries Service. Shell spokesman Curtis Smith told Petroleum News Aug. 2 that FWS had issued an authorization for Shell’s Chukchi Sea seismic program, but that neither FWS nor NMFS had yet issued authorizations for the Beaufort Sea drilling.

And there’s no word yet on the outcome of an appeal by the North Slope Borough and several environmental organizations to the Environmental Appeals Board against Shell’s air quality permits, issued by the U.S. Environmental Protection Agency for the Beaufort Sea drilling.

But, in any case, Shell cannot start its drilling activities until at least Aug. 14, when the U.S. Court of Appeals for the 9th Circuit will hear oral arguments relating to a motion to suspend the Shell drilling program, pending a decision in an appeal by the North Slope Borough and the Alaska Eskimo Whaling Commission against MMS approval of Shell’s Beaufort Sea exploration plan.

Two other appeals, both by groups of environmental organizations, against MMS approval of the Shell plan are going through the 9th Circuit Court. The court has issued a consolidated briefing schedule for all of the cases, with opening briefs due on Aug. 17 and answering briefs due on Sept. 26.



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