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Key takeaways from Arctic report NPC study was a collaborative effort that supported offshore development while also recommending further research, panel says Alan Bailey Petroleum News
Reflecting on a recently published National Petroleum Council report supporting oil and gas development in the U.S. Arctic offshore, a panel consisting of four members of the team that had prepared the report told a meeting of Alaska business people on April 9 that the report has three takeaway messages. The report resulted from a collaborative effort involving the interests of more than 260 participants; the report concluded that it is possible to safely develop Arctic offshore opportunities; and the report identified scope for more research into topics such as Arctic oil spill response technologies, the panel told a joint meeting of the Alaska Support Industry Alliance and the Resource Development Council for Alaska.
Exploration should proceed As described in the April 5 issue of Petroleum News, the report recommends that oil exploration in the Arctic Alaska offshore should proceed without delay, to stave off a future decline in U.S. oil production when Lower 48 shale oil production passes its peak. After decades of research, much is known about the Arctic’s physical, ecological and human environments. And Arctic offshore exploration and development can be conducted using proven technologies, the report says.
The National Petroleum Council is a federally chartered and privately funded committee that provides advice to the Secretary of Energy on matters relating to oil and gas. Ahead of the United States taking the chair of the Arctic Council, the intergovernmental forum of Arctic nations, Energy Secretary Ernest Moniz had asked the Petroleum Council for guidance on potential research and technology to support prudent development of Arctic oil and gas resources, balancing factors such as community interests, environmental stewardship and economic opportunism. The report is the outcome of that request.
Diverse team Carol Lloyd, co-chair of the coordinating subcommittee for the report and vice president, engineering, for the ExxonMobil Technology Upstream Research Group, emphasized the diversity of the study team. With 105 organizations involved, 43 percent of the participants came from industry; 30 percent from federal and Alaska state government; and 12 percent from academic institutions - the remaining 15 percent was about equally split between Alaska Native organizations, independent consultants and environmental organizations, Lloyd said.
“It’s a consensus report. Everyone had to agree with every word that is in the report,” Lloyd said. “I’m particularly pleased with the degree of consensus that we were able to reach with some pretty significant conclusions.”
The study leading to the report found that the Arctic has substantial hydrocarbon resource potential, with the Alaska Beaufort and Chukchi seas estimated to hold large volumes of undiscovered oil and gas. At the same time, although the Arctic climate and ice cover are changing, much is known about the region. And the oil and gas industry has a long history of successful operations in Arctic and Arctic-like conditions, Lloyd said.
With shallow water depths in the Alaska Arctic offshore and open water seasons two to three months in duration, it is possible to use traditional floating drilling rigs for exploration while installing fixed gravity-based structures for field development.
But the region poses challenges when it comes to the economic viability of oil and gas development. And the general public does not have confidence in the oil industry’s ability to pursue Arctic opportunities safely, in a manner that maintains environmental stewardship, Lloyd said.
Spill prevention and response Although internationally there have been substantial technical and regulatory improvements relating to oil spill prevention and response in sea-ice conditions, not all stakeholders in the Arctic accept these improvements and not all of the improvements are currently available in the United States. The study team has therefore recommended publicly visible, collaborative research, to discuss, validate and make available new technologies, Lloyd said.
Meantime, recent new technologies such as capping stacks, devices designed to be lowered onto a well head for sealing a leaking well, have made offshore drilling much safer than it was prior to the Deepwater Horizon disaster in the Gulf of Mexico, she said.
The study team recommended that the Bureau of Safety and Environmental Enforcement, the federal agency responsible for the regulation of offshore drilling safety, should participate in a joint industry Arctic oil spill response research program that has been under way since 2012 - eight companies are collaborating in that program, Lloyd said.
Research recommendations The executive summary of the report includes 32 high-priority recommendations for research, while the main body of the report contains 60 additional research recommendations, Lloyd said.
Although the Energy secretary had asked for a technical study into the prudent development of Arctic oil and gas, the study team did consider government policy issues, where those issues have a clear intersection with technical questions. For example, government regulations have an impact on the use of technology, Lloyd said.
Lloyd later told reporters that the study team had excluded from consideration the question of the sharing of federal government revenues from offshore oil and gas with local communities. The team viewed revenue sharing as a commercial issue, with no obvious connection to technology, she said.
In terms of oil spill response technologies, the report recommends that government regulators consider the use of techniques such as in-situ burning and oil dispersant application, as well as the use of mechanical oil recovery, the technique currently favored in the Arctic by U.S. regulators. However, a policy change in this area would require the alignment of public support for the techniques in question, Lloyd commented.
The report recommends collaborative initiatives to conduct further research into the human and ecological environment of the Arctic, in addition to the substantial amount of research that is currently in progress. Research into long-term population estimates for key Arctic wildlife species, especially species dependent on sea ice, would be beneficial.
While the report’s coordinating subcommittee included biologists and human environmental scientists, one member of the team met separately with several environmental organizations, to identify their concerns with Arctic offshore oil and gas development, Lloyd said. Most of those concerns revolved around the feasibility of conducting an oil spill response in sea ice, she said. The study team tried to understand these concerns and fully debated them, she said.
Research has shown that offshore spill response techniques used in warm climates typically work better in cold Arctic conditions, Lloyd later told reporters.
Obstacles to exploration Having taken a view that Arctic offshore oil and gas development could, in fact, be conducted safely, the team identified two issues that currently impede exploration: the short length of the drilling season and the 10-year terms of U.S. outer continental shelf oil and gas leases.
The brevity of the drilling season results from a requirement to drill in open water conditions, with adequate time allowed during the open water season for the drilling of a relief well - a relief well plugs a well following a loss-of-control incident. The same-season relief well requirement can result in having to mobilize drilling assets over two seasons to drill a single well, Lloyd said. If people can become comfortable with the use of new well capping technologies, as ways of sealing a well until a relief well is completed, the length of the drilling season could be extended. Effective ice management operations could perhaps extend the drilling season further, possibly halving the cost of an exploration well if a well can be drilled in a single season.
Well kill system Doug Hoyt, a member of the report coordinating subcommittee and manager of ExxonMobil’s Corrosion and Materials Group, later described to reporters a new well kill system that has been used in the Kara Sea and that goes below the blowout preventer at the well head. This device, which is self contained and has blind shear rams similar to those in the blowout preventer, can be remotely activated using an acoustic system, if the blowout preventer fails. A well capping stack then could then provide a third line of defense, if necessary.
And, whereas it might take weeks or months to complete the drilling of a relief well, wellhead devices can seal a well immediately, John Guy, deputy executive director of the National Petroleum Council commented.
The 10-year lease standard, designed for the Gulf of Mexico, requires the completion of exploration and field appraisal activities within that 10-year window, Lloyd said. That is almost impossible in the Arctic, she said. Some jurisdictions outside the United States have split their leases into primary exploration terms and discovery licenses - the study team recommended that the Department of the Interior researches this issue, she said.
Arctic collaboration The report also makes recommendations to a new committee that President Obama has formed to coordinate Arctic policies across government agencies. And the oil and gas industry is interested in collaborating with the State Department over the planning of oil pollution preparedness and response exercises, under the terms of international agreements formed through the Arctic Council, Lloyd said.
Reflecting on the Energy secretary’s objectives in calling for the National Petroleum Council’s report, Nancy Johnson, co-chair of the coordinating subcommittee and Department of Energy director for environmental sciences and policy analysis, told reporters that her agency has been told to give priority to the Arctic. The Department of Energy is very serious about figuring out how to move forward, she said. Johnson also commented that in the past the Department of Energy had not necessarily done well in communicating with people in Alaska.
“We’re seeing more attention being paid to working with Alaskans, the state of Alaska and the Alaska communities,” Johnson said.
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