Arctic OCS lease sales in 2015, 2016

Department of the Interior includes 3 Alaska sales — Beaufort, Chukchi, Cook Inlet — in 2012-17 proposed OCS lease sale schedule

Kristen Nelson

Petroleum News

The U.S. Department of the Interior said Nov. 8 that its proposed outer continental shelf lease sale program for 2012-17 includes 15 lease sales in six offshore areas.

In Alaska those include a Beaufort Sea sale in 2015, a Chukchi Sea sale in 2016 and a special interest Cook Inlet sale in 2013.

Interior said placing the Beaufort and Chukchi sales later in the schedule allows “time to learn from any interim exploration and further analyze environmental issues, subsistence use needs, and infrastructure capabilities — so that the lease sale can be tailored to balance these issues.”

Secretary of the Interior Ken Salazar said at a press briefing that the area of the OCS being made available for leasing “will allow for development of more than 75 percent of the undiscovered, technically recoverable oil and gas resources in the OCS.”

He said the proposed lease sales take into accounts lessons learned from the Deepwater Horizon tragedy and said they were “an important step … towards safely expanding oil and gas production on the OCS.”

Appropriate sensitivity

He said there are “substantial issues associated with major production in the Chukchi and Beaufort,” including some scientific uncertainty and infrastructure questions.

Placing the Chukchi and Beaufort sales later in the sale period, allows use of “the intervening years to better address the science gap the United States Geological Survey identified in a report to the secretary … and also to continue the discussion with interested parties.”

Hayes said there was an additional innovation in the draft proposal that instead of “just opening up the entire area for leasing, we would take a tailored approach that would take into account and not have leasing in areas where there are subsistence uses and sensitive environmental issues.”

BOEM said in its description of the proposed leasing program that subsistence whaling deferral areas near Barrow and Kaktovik will be excluded from leasing, the same areas that were deferred in 2007-12. In the Chukchi, there will be at least a 25-mile nearshore buffer area excluded from leasing, as in 2007-12.

“Additional deferral areas may be added to the design of individual lease sales,” the agency said.

Infrastructure issues

Those infrastructure issues include the lack of deep harbors on the North Slope, limitations on available vessels and questions about how oil, if discovered, would be delivered to the pipeline at Prudhoe Bay, he said.

Asked about approval of Shell’s plans for summer exploratory drilling in the Beaufort and Chukchi seas, Salazar said that if those plans “are approved in either the Beaufort or the Chukchi or both,” that it was his view that “it is a step toward moving forward with the development of additional information so we can make better-informed decisions about the future.”

Salazar also noted that more than 30 exploration wells have been drilled in the Beaufort and the Chukchi, and said exploratory drilling “is a very different reality to deal with than full-scale development.”

Cook Inlet

The Bureau of Ocean Energy Management will hold public hearings in December to comment on the draft programmatic environmental impact statement for the proposed 2012-17 OCS oil and gas leasing program.

Alaska hearings include: Wainwright, Dec. 5; Nuiqsut, Dec. 6; Kaktovik, Dec. 7; Fairbanks, Dec. 8; Anchorage, Dec. 9; Kotzebue, Dec. 12; Point Hope, Dec. 13; Point Lay, Dec. 14; and Barrow, Dec. 16.

Resource assessment also released

In conjunction with its 2012-17 proposed outer continental shelf lease sale program, the U.S. Department of the Interior also released a 2011 OCS resource assessment.

The assessment, of undiscovered, technically and economically recoverable oil and natural gas resources outside of known OCS oil and gas fields, uses information available as of Jan. 1, 2009, and incorporates advances in petroleum exploration and development technologies, the Bureau of Ocean Energy Management said in a fact sheet on the assessment.

Mean estimates of undiscovered technically recoverable resources, or UTRR, for the Alaska OCS region remain relatively unchanged in comparison to the 2006 assessment, BOEM said, noting that since the prior assessment industry has spent almost $3 billion on new Arctic Alaska OCS leases, but “there has been no significant new geologic data gathered in the region and none of the leases acquired since the previous assessment have been tested.”

The agency also said that due to sparse data from the majority of the plays in the Alaska, Atlantic and part of the Pacific OCS regions, “analog plays were developed with a more subjective approach to cover the range of uncertainties associated with these plays.”

Estimates from the assessment for the entire OCS range from 66.35 billion barrels of oil at the 95 percent probability level to 119.11 billion barrels at the 5 percent probability level; the mean is 88.59 billion barrels. Natural gas estimates range from 308.28 trillion cubic feet (95 percent probability) to 544.83 tcf (5 percent probability) with a mean of 398.37 tcf.

When the figures are converted to a barrel of oil equivalent basis, 55 percent of the potential resources are in the Gulf of Mexico (87.45 billion barrels of oil equivalent) and 31 percent in the Alaska OCS region (50 billion BOE). The Atlantic and Pacific OCS regions are estimated to contain smaller volumes, 8.87 billion BOE for the Atlantic OCS region and 13.07 billion BOE for the Pacific OCS region.

The majority of the mean BOE for the Alaska OCS, 29.04 BOE, is in the Chukchi, with 13.14 BOE in the Beaufort.

The agency said that after more than 60 years of OCS exploration and development, “66 percent of the total endowment on a mean BOE basis remains undiscovered and is represented by the UTRR. Of the remaining, more than 20 percent of the total endowment has already been produced, and 6 percent is attributed to remaining reserves and appreciation.”

—Kristen Nelson