Providing coverage of Alaska and northern Canada's oil and gas industry
September 2014

Vol. 19, No. 39 Week of September 28, 2014

A little slippage

Rework timeframe for Chukchi Sea lease sale SEIS moves back a few weeks

Alan Bailey

Petroleum News

In a status report filed with the federal District Court in Alaska on Sept. 22 the Bureau of Ocean Energy Management said that it now anticipates publishing a draft of its revised version of the supplementary environmental impact statement, or SEIS, for the 2008 Chukchi Sea oil and gas lease sale in late October for public review. Following a 45-day public comment period and subsequent revisions to the document, the new schedule would lead to the issue of the final SEIS in late February, with a new record of decision for the lease sale coming 30 days later.

In July the bureau had said that it anticipated publishing the draft SEIS in early October, with the final SEIS anticipated in early February and the record of decision expected in early March. The new status report says that BOEM continues to commit maximum resources to the SEIS rewrite, including the authorization of additional work hours and overtime.

The District Court ordered a rework of the lease sale environmental impact statement following a January 2014 decision by the U.S. Court of Appeals for the 9th Circuit upholding an appeal against the validity of the document. The 9th Circuit judges ruled that, when the U.S. Minerals Management Service, BOEM’s precursor organization, prepared the EIS it had arbitrarily, without explanation, assumed that potential oil development in the Chukchi Sea would only amount to a single oil field, with an estimated 1 billion barrels of economically recoverable oil.

BOEM has to incorporate a better reasoned estimate of the scale of potential Chukchi Sea oil and gas development, taking into account the potential oil spill risk ramifications if the estimates of recoverable oil increase.

Critical timing

The timing with which BOEM issues a new SEIS and lease sale decision is particularly critical for Shell, the company spearheading efforts to explore in the Chukchi Sea. Shell purchased its Chukchi Sea oil and gas leases in the lease sale that is the subject of the District Court appeal - lease related activities, including the approval by BOEM of Shell’s Chukchi Sea exploration plan, are banned until BOEM has completed the SEIS revision and issued a new decision affirming the lease sale.

Shell hopes to continue its Chukchi Sea exploration drilling program in the summer of 2015, presumably starting in July, after sea ice has retreated from the region. But, to achieve that target, the company must presumably start activating its drilling fleet several months earlier, an operation involving significant work effort and cost.

In its status report to the District Court BOEM said that it has now refined its estimates of Chukchi Sea exploration and development scenarios and has incorporated input from various government agencies that are working with BOEM on the SEIS. BOEM said that it has received an analysis of oil spill risks associated with the scenarios it has developed and has completed computer runs that predict the trajectories of oil slicks resulting from oil spills. That analysis has led to calculation of the probabilities of oil spills impacting specific coastline segments and resource areas.

BOEM analysts have started using the oil spill assessment to analyze the potential environmental impacts of oil spills and gas releases that might result from activities anticipated in the exploration and development scenarios, the status report says.

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