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Some keys to success in the Arctic BOEM director says future oil exploration & development will depend on factors such as public confidence, respect for communities Alan Bailey Petroleum News
As someone who grew up in Alaska, Tommy Beaudreau, the director of the Bureau of Ocean Energy Management, or BOEM, says that he understands the critical importance to the state of the oil and gas industry.
“In a very personal way energy and resource development are well understood to me to be the life blood of this state and what so many families in Alaska are dependent on,” Beaudreau told the Resource Development Council’s annual conference on Nov. 20.
At the same time Alaskans wish to protect the Arctic landscapes, he said.
Beaudreau focused on Arctic Alaska, where he sees six key factors required for successful resource development, in a situation where the sensitive environment is changing and where Native people depend on subsistence hunting for food and for maintenance of their culture.
“Arctic exploration poses substantial and unique operational challenges to resource development. It’s an expensive place to work. There are difficult logistics involved,” Beaudreau said. “Although there are those significant operational and environmental challenges, the resource potential is enormous. The Chukchi Sea, for example, is second only to the central Gulf of Mexico in terms of estimated undiscovered, recoverable oil and gas resources.”
Safety and the environment The first key to success in Arctic Alaska is a successful safety and environmental performance, Beaudreau said. He said that the National Petroleum Council, a federal advisory committee, had recently published the results of a study into prudent development conducted by a team of experts from industry; state and federal government agencies; conservation groups; financial institutions; and academia. That study emphasized that the critical path to sustained and expanded resource development in North America includes effective regulation and a commitment by industry and regulators to continuous improvement in eliminating or minimizing environmental risks, Beaudreau said.
“I think this is especially true in the Arctic,” Beaudreau said. “And it also represents what I believe is a key and fundamental insight into the relationship between industry, government and public confidence.”
In fact, public confidence that industry is operating responsibly, with strong, fair and independent regulatory oversight, is the second key to Arctic success, he said.
Contingency preparations A third key is adequate preparation for all contingencies in the remote, inhospitable and unforgiving Arctic environment, especially offshore where there is a lack of support infrastructure.
“Contingency planning and preparedness are absolutely critical,” Beaudreau said, commenting that operators spend huge amounts of capital and expend equally huge amounts of planning effort on contingency arrangements. Regulators spend much time focusing on questions such as how to deal with a worst case accident scenario, recognizing their responsibility to seek good answers and thus bolster public confidence while tamping down opposition.
Respect for communities Having respect for Arctic communities, recognizing their needs and concerns is a fourth key, Beaudreau said.
“Concerns about food security and traditional ways of life in villages are real and they’re significant,” Beaudreau said.
At the same time, communities are interested in how exploration and development can bring them employment, revenue and new sources of income: Several companies have established relationships with the communities.
“The dividends are enormous and it is the right way to go about business,” Beaudreau said.
Efficient permitting Another key is coordination and efficiency in the permitting of exploration and development projects. In addition to being BOEM director, Beaudreau co-chairs the federal Interagency Working Group for coordinating the permitting of oil and gas projects in Arctic Alaska. Established by President Obama a couple of years ago, the working group has pulled together representatives from all the relevant agencies to address agency disconnects that in the past have plagued Arctic Alaska projects.
“Shell’s 2012 operation became the test case for how that (permitting) process should work and I think we have a lot to be proud of through that process, and I think it worked pretty well,” Beaudreau said. The working group is now applying its enhanced interagency coordination to projects such as ConocoPhillips’ Moose’s Tooth exploration in the National Petroleum Reserve-Alaska and Shell’s planned Chukchi Sea drilling, he said.
Integrated management A sixth key to success is the integrated management of Arctic permitting through a strategic vision for the region, Beaudreau said. Rather than permitting projects piecemeal, it is necessary to consider how the various projects might fit together, assessing any tradeoffs that might be involved and considering the priorities behind the permitting. For example, an exploration project in the Chukchi Sea might trigger a new offshore oil development that would require a new oil pipeline across the National Petroleum Reserve-Alaska. How would that interact with what companies are doing onshore? What would be the environmental concerns?
“We need to take the opportunity now on a very broad base and in an inclusive way to have a forum for working through all of those issues, and to have those considerations inform decision making on individual projects, so that we can be smart about how the pieces fit together to maximize the opportunities presented by the Arctic,” Beaudreau said.
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