|
Arctic containment system permitted Shell CFO: Containment dome successfully tested; company waiting for assessment of drilling rigs before moving on Alaska plans Alan Bailey Petroleum News
Shell’s Arctic containment barge, the Arctic Challenger, and its oil spill containment system have been tested and permitted, Simon Henry, Shell’s chief financial officer, commented during question and answer sessions following the company’s announcement of its first quarter 2013 results.
“That containment barge is now fully permitted and ready to roll,” Henry said.
Regulatory requirement Prior to its 2012 drilling season in Alaska’s Beaufort and Chukchi seas Shell had committed to deploy the Arctic Challenger as a line of defense against an oil spill, should a well go out of control, the well’s blowout preventer fail and the company’s capping stack fail to plug the well. And the containment system became part of the regulatory requirements to drill any of the company’s wells into hydrocarbon bearing zones.
In the event, with the retrofitting of the containment barge not being completed in time for the 2012 drilling operations, and with the containment dome failing its initial testing, late in the drilling season, Shell had to make do with the drilling of the top-hole sections of one well each in the Beaufort Sea and the Chukchi Sea, deferring the drilling into hydrocarbons for a subsequent year.
Rigs in yards But, with the company’s two Arctic drilling rigs both in Asian yards for repair and upgrade, Shell has postponed its next drilling operations until 2014 at the earliest — one rig, the floating drilling platform, the Kulluk, was damaged during a grounding incident in the Gulf of Alaska, while the other rig, the Noble Discoverer, suffered engine problems while attempting to depart Alaska after the end of the 2012 drilling season.
“I don’t have a specific update on what the likely outcome is,” Henry commented, during a media webcast, adding that Shell is waiting for a technical appraisal of the rig situation before deciding on the company’s next plans. The company will not know what needs to be done with the rigs for another month or two, he told financial analysts.
Henry said that in 2012 Shell had been “moving too many things in parallel” and that, to drill in 2014, the company would need two rigs in place and permits lined up in plenty of time.
“We want to make sure we get the permits in place this year and (are) not leaving them until the last minute next year,” he said.
Criticism acknowledged Henry, while saying that Shell had successfully deployed a drilling fleet of more than 25 vessels in the Arctic in 2012, acknowledged Department of the Interior criticism of the company’s management of its drilling program — that criticism emerged from an Interior investigation following the Kulluk grounding.
“It’s very clear that when you’re moving 25 plus vessels into a theater of operations it does need military style planning, and there are some lessons we need to learn from that,” Henry said.
Henry told analysts that Shell has booked just under $1.8 billion on its balance sheet for its Alaska oil and gas leases, on an unchanged assumption that the company will ultimately gain value from exploratory drilling in the Alaska offshore. The company has booked $700 million as the capitalized cost of the top hole wells drilled in 2012, he said. Shell expects to spend about $1 billion on its Alaska program in 2013, on the rig repair work and on continuing work in the state, Henry said.
|
