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Vol. 19, No. 35 Week of August 31, 2014
Providing coverage of Alaska and northern Canada's oil and gas industry

Shell files plan

Company wants to drill in the Chukchi in 2015; yet to make final decision

Alan Bailey

Petroleum News

On Aug. 28 Shell filed an exploration plan with the Bureau of Ocean Energy Management for exploration drilling in Alaska’s Chukchi Sea in the open water season of 2015. The company says that it has not yet made a final decision on whether to proceed with the drilling in 2015 but that it is filing the plan in readiness, should it decide to move ahead.

“Today, we submitted revisions to our previously approved Chukchi Sea exploration plan to the Bureau of Ocean Energy Management; this step is necessary to keep our 2015 exploration options viable,” Shell spokeswoman Megan Baldino told Petroleum News in an Aug. 28 email. “The plan details our exploration program for the Chukchi Sea.”

Under Shell’s plan, the company envisages using the drillship Noble Discoverer and the Transocean semi-submersible rig, the Polar Pioneer, to drill in the Chukchi. Unlike in a previous plan, in which the Polar Pioneer was to be stationed in Dutch Harbor in the Aleutian Islands as a backup rig, under the new plan both rigs will be deployed to the Chukchi, Baldino told Petroleum News.

Shell’s Chukchi Sea exploration has been targeting the Burger prospect, about 80 miles offshore the western end of the North Slope.

“We continue to take a methodical approach to this exploration phase and will only proceed with a program that meets the conditions necessary to proceed safely and responsibly,” Baldino said.

Lease sale appeal

A final decision on activating the plan will presumably depend on the outcome and timing of an appeal against the validity of the 2008 lease sale in which Shell purchased its Chukchi Sea leases. Shell and other companies with Arctic outer continental shelf leases are also waiting for the release by the Bureau of Safety and Environmental Enforcement of new Arctic offshore drilling safety rules. Those rules will presumably impact the economics and practicalities of Arctic offshore exploration.

Shell’s previous Chukchi Sea exploration plan was filed in November 2013 for proposed drilling in the summer of 2014. In the event the company cancelled that drilling project because of a 9th Circuit court decision, upholding the appeal against the 2008 lease sale.

The lease sale appeal has since moved to federal District Court in Alaska. Under an order from that court, oil exploration activities in the Chukchi Sea are currently on hold while BOEM reworks the environmental impact statement for the sale and then issues a decision on whether it had been appropriate to conduct the sale. Meantime the court is allowing BOEM to review lease-related documents such as Shell’s exploration plan, but the agency cannot issue a decision on whether to approve the plan until it has made its new lease sale decision. Shell’s ability to carry out its planned exploration is also contingent on BOEM making a decision affirming the 2008 lease sale.

Currently, Shell has no plans for continued exploration drilling in Alaska’s Beaufort Sea.

“Our focus remains on the Chukchi,” Baldino said.



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