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Vol. 12, No. 47 Week of November 25, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

Rick Fox: Shell in Alaska for long haul

Although a lawsuit has put Beaufort Sea drilling on hold in 2007 company moved ahead with Chukchi seismic and other programs

Alan Bailey

Petroleum News

Despite the setback of a court-enforced suspension of Shell’s Beaufort Sea drilling program, Rick Fox, the company’s Alaska asset manager, gave an upbeat assessment of Shell’s progress in Alaska at the Resource Development Council annual conference on Nov. 14.

“We had an excellent year although we didn’t get to drill,” Fox said.

The U.S. Court of Appeals for the 9th circuit has placed an injunction on Shell’s Beaufort Sea drilling plans until resolution of a court case against U.S. Minerals Management Service approval of the company’s Beaufort Sea exploration plan. But the company was able to proceed with a planned program of seismic data acquisition in the Chukchi Sea in preparation for an MMS Chukchi Sea lease sale scheduled for February 2008.

“A week ago Sunday, we wrapped up our seismic operations in the Chukchi Sea,” Fox said. The seismic crew had continued acquiring 3-D seismic until late in the season but had to stop eventually for safety reasons, as ice started to build up on the ship superstructure, he said.

Shell’s Beaufort Sea site clearance and shallow hazards surveillance work also proceeded as planned.

Marine mammal monitoring

And a marine mammal monitoring program swung into action.

“We had a marine mammal monitoring program with acoustic transponders all across the Chukchi and the Beaufort Sea in arrays from 5 miles out to 50 miles out,” Fox said. “We collected aerial data and there were many other efforts we had going on.”

The acoustic monitoring equipment captured quite a bit of data on marine sounds, including noise from industrial activities as well as sounds from marine animal life.

“We’ve started establishing trends of impacts,” Fox said. “… We’re very interested in providing the science that gives us the confidence and gives the communities the confidence that what we’re going to do will work. … We co-designed that with the North Slope Borough wildlife department.”

At one point Shell had deployed close to 1,100 people in its summer program — the Alaska team did a great job of bringing that number of people on in a short time and of conducting a safe and environmentally sensitive operation, Fox said.

As far as Shell can tell there was no negative impact on the subsistence hunt.

“I think they had a very successful hunt in all areas,” Fox said.

Focus on the Arctic offshore

Shell’s interest continues both in offshore regions and in the Arctic, with operations in the Sakhalin, Norway and Canada, as well as in Alaska, Fox said. So Shell’s experience and interests dovetail into offshore development in Arctic Alaska, he said.

“We’re very much focused on the Beaufort Sea where we have quite a lease holding,” Fox said.

Fox compared Shell’s challenges in the Alaska outer continental shelf with the company’s pioneering work in oil development in deep water.

“We stayed with that when it was difficult, very much hung in there and made that work,” Fox said. “… I think that’s the spirit within Shell.”

And MMS has estimated major oil and gas resources in the U.S. Arctic offshore.

“We believe the country needs energy and we’d like the chance to go look for it,” Fox said.

Beaufort Sea exploration back in the 1980s came up with some promising results, but Shell needs to do more exploration and appraisal work to understand the potential of the region, Fox said.

“We’ve got to know before we can start making the sort of commitments this will take,” Fox said.

Importance for Alaska

The number of Shell jobs and contracts seen this year represents just the beginning of the potential impact of Shell’s operations in Alaska. Following exploration would come an extended period of oilfield development and production, benefiting people some of whom are not yet born, Fox said.

“That’s what we’re looking for: A long campaign in Alaska and development in the OCS,” Fox said. “We’re absolutely committed to bringing economic opportunity to Alaska companies and jobs to Alaskans.”

And Shell is very much involved in dialogues with Alaska communities — they obviously have many concerns about what may happen, Fox said.

“For the past two years we’ve been in the communities talking and learning,” Fox said. “Obviously we wanted to go maybe faster than the communities were prepared. We are continuing in that discussion … and we’re very hopeful that we’ll make progress and find the common ground that we’ll need to proceed.”

Listening to communities

Fox cited some sample situations where Shell has listened to the communities.

In one instance the community said not to bring any red boats because those scare the whales or cause them to divert.

“We asked them what color to paint (the boats) and they said blue and white,” Fox said.

Shell managed to get to the company that operates the Nanuq, the oil spill response vessel that Shell commissioned for the Beaufort Sea drilling, before the vessel was painted.

“I think it’s the only boat in their fleet that’s blue and white,” Fox said. “If we can apply the traditional knowledge, we’re going to.”

Shell also heard that just using Deadhorse in the central North Slope as a communications center does not work. Instead people wanted a greater level of communication in all of the communities, including the communities on the Chukchi Sea coast.

“We actually established communications centers in all six coastal villages, with full-time employment, 24-7,” Fox said. “… The North Slope Borough partnered with us and gave us the licenses to operate (the system).” A whaler offshore Wainwright, for example, could click on his VHF radio and talk to an operator in Barrow or in Wainwright, he said.

Another community asked if it would be possible to avoid disturbing the subsistence hunting by acquiring seismic data from the sea ice during the winter. After an investigation, Shell established that people had already researched the possibility of doing this but that further testing was required to establish a viable technique.

“So we executed a $25 million research project last winter and we’ll being using it for real, if all the permits work out, this winter,” Fox said.

Egress training center

Shell, in conjunction with the Challenger Learning Center and the University of Alaska, has established a helicopter underwater egress training center in Kenai in Southcentral Alaska. That’s very important for long helicopter flights over cold water, Fox said.

“We had almost 600 people trained through there this year,” Fox said.

And for the second year running Shell provided the emergency cache and supplies for the Cross Island subsistence hunt.

Following advice from the North Slope Borough, the Shell search and rescue helicopter has a winch, so that it does not have to land.

“Our search and rescue helicopter participated in a number of events with the North Slope Borough … as well as they did in Canada,” Fox said. “… In Canada we actually rescued some people who otherwise might not have survived.”

Shell’s operations manager, Sue Moore, is very involved in statewide workforce development, as Shell looks into what it will take to operate in Alaska, Fox said.

Shell is currently assessing its options for the coming year — meantime one of the company’s Beaufort Sea drilling rigs has gone to Australia to work on a Shell project there and the other rig is being over-wintered in Canada.

“We have choices for some of that equipment, so we’ll have to make a choice a little earlier this year than we did last year,” Fox said. “We’re working very closely with the North Slope and others to find that common ground that it’s going to require to get through this. The 9th Circuit hears oral arguments on Dec. 4 and we’re optimistic about that process.”

Shell is strongly committed to its endeavors in Alaska, Fox assured the conference audience.

“There’s a lot in the future for the OCS in Alaska and we want to be part of it. We’re very focused on getting the job done in the Beaufort Sea,” Fox said. “… We’re here for the long term and we’re going to work things out, that’s our belief.”



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