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Vol. 17, No. 40 Week of September 30, 2012
Providing coverage of Alaska and northern Canada's oil and gas industry

A careful approach

Statoil watches Shell drilling project; prepares Chukchi exploration plan

Alan Bailey

Petroleum News

Norwegian oil major Statoil continues to see the Chukchi Sea as an exciting place in which to explore for oil but is carefully considering its next moves in the region, waiting to see what transpires in Shell’s Chukchi Sea drilling campaign, Lars Andreas Sunde, Statoil’s head of Alaska operations, has remarked in recent speeches to both the Alaska Support Industry Alliance and the Alaska Oil and Gas Congress.

The Chukchi Sea dovetails into Statoil’s overall interest and experience in oil and gas development in the Arctic — the company already has an operating Arctic gas field at Snohvit in the Barents Sea, as well as pursuing exploration and development plays in the Barents Sea, in the Russian Arctic offshore, offshore Newfoundland and offshore west Greenland.

Statoil had been hoping to drill its first Chukchi Sea exploration well in 2014 but, as Shell’s program slowly moves forward, Statoil has deferred its drilling expectations to 2015 at the earliest. And decisions on additional drilling will depend on the results from that first well, Sunde told Petroleum News in a Sept. 20 interview.

“Our message has been that we were planning a well in 2014, but recent events and challenges experienced by others have caused us to re-evaluate our decision timeframe,” Sunde said. “We are committed to improve our understanding of what it will take to successfully explore in Alaska and our team will continue its work in learning how to enhance the regulatory process and work with our industry partners.”

Regulatory clarity

Sunde explained that Statoil’s re-evaluation of its Chukchi Sea plans particularly stems from uncertainty over the government regulatory process. In particular, the outcome of the splitting of the Department of the Interior’s oversight of outer continental shelf oil and gas activities into two agencies — the Bureau of Ocean Energy Management and the Bureau of Safety and Environmental Enforcement — has yet to settle, Sunde said. For example, the Bureau of Safety and Environmental Enforcement has been issuing new rules for offshore operations using notices to lessees. And improved communication and coordination between different regulatory agencies would be helpful, Sunde said.

“The main concern is always (regulatory) clarity and predictability,” he said.

Meantime, Statoil has contracted with consultants to work on an exploration plan for Chukchi Sea drilling, with completion of the plan anticipated at some time in 2013.

Statoil entered the Alaska oil scene when it purchased leases in the U.S. Minerals Management Service’s 2008 Chukchi Sea lease sale and in 2010 Statoil conducted a 3-D seismic program in its 16 leases located about 100 miles northwest of the Chukchi Sea coastal village of Wainwright. From this survey the company identified two oil prospects, called Augustine and Amundsen. Initially Statoil anticipates focusing its drilling efforts on Amundsen, the larger of the prospects.

Fieldwork results

In the open water season of 2011 Statoil conducted shallow hazards surveys and geotechnical coring at potential drilling sites in its leases — the company has now assessed the results of that fieldwork and has concluded that it can drill safely, Sunde said. Although yet to make a final decision on the type of drilling rig to use in the Chukchi, the company is considering the use of a jack-up rig, a configuration in which a drilling platform is held above the sea on legs lowered to the seafloor. The geotechnical survey results show that the seabed is capable of supporting a jack-up drilling platform, Sunde said.

Statoil is also partnering in the exploration of ConocoPhillips’ Chukchi Sea Devil’s Paw prospect, some distance to the south of Statoil’s leases. ConocoPhillips has said that it plans to drill at Devil’s Paw in 2014.

Community dialogue

Sunde said that his company is particularly anxious to work with North Slope communities, to address their concerns about offshore oil and gas activities.

“An open dialogue with the local communities about our plans is very important to Statoil,” Sunde said. “We are committed to base our work on understanding the local environmental and cultural challenges. Through close dialogue, interactions, openness and transparency we wish to build trust in Statoil as a company and to listen to and address concerns for the environment expressed by local stakeholders. … Over the past 36 months, we have held open-house informational meetings in eight communities — Barrow, Wainwright, Atqasuk, Point Lay, Point Hope, Kivalina, Kotzebue and Nome — and have participated in dialogue sessions with village leadership. In total we have held more than 120 meetings with Native villages and special interest groups.”

Diversity of views

There is a wide diversity of views among North Slope residents when it comes to the merits or otherwise of offshore oil development and Statoil receives both statements of support for its plans and challenging questions, Sunde said.

“We wish to understand the concerns that the population on the North Slope has with offshore drilling, because it makes us able to respond better,” he said. “And I appreciate the openness of these conversations that we’ve had in the villages.”

Sunde said that the main concern among North Slope residents is the possibility of an offshore oil spill. There is also concern about the environmental disturbance from sound associated with offshore seismic surveys, although Statoil has already completed its Chukchi Sea seismic program.

Environmental monitoring

Statoil continues to work with Shell and ConocoPhillips in a multi-year program of Chukchi Sea environmental monitoring and research, designed to acquire data for the assessment and monitoring of the environmental impacts of offshore industrial activities. This program has included the deployment of subsea sound recorders for the monitoring of sounds from marine mammals; the program has also included field research into the marine environment in leased areas.

Sunde said that Statoil, as part of the company’s own internal standards and procedures, will prepare its own environmental assessment of its planned Chukchi Sea work, in addition to any environmental assessment required under U.S. regulations for offshore oil and gas activities. These assessments will address concerns raised during meetings with North Slope communities, he said.

Incremental innovation

In the context of the Arctic offshore as a whole, Statoil sees the Chukchi Sea as a region where there is proven technology for drilling wells, but where incremental innovation will be needed to devise safe and effective technologies for field development and oil production, Sunde said. That is distinct from regions such as the Barents Sea and the Grand Banks off the east coast of Canada, where exploration has progressed successfully for many years and where there is current field production using established technologies

On the other hand, an Arctic region such as offshore east Greenland, with relatively deep water and significant ice challenges year round, will require innovation for both drilling and development, Sunde said.

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