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Vol. 15, No. 32 Week of August 08, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Still on hold: Statoil’s Chukchi seismic in doubt after injunction

The question of whether Statoil will be able to carry out its planned Chukchi Sea seismic surveys in 2010 still hangs in the balance, with continuing uncertainty over the scope of a federal court injunction over activities associated with the U.S. Minerals Management Service 2008 Chukchi Sea lease sale. Cancellation of Statoil’s 2010 seismic shoot would presumably delay the company’s Chukchi Sea exploration program by a year, besides upping the cost of the program as a consequence of putting a seismic fleet on hold.

The injunction came on July 21 in response to an appeal challenging the 2008 lease sale, with Alaska District Court Judge Ralph Beistline banning actions associated with leases purchased in the sale until the U.S. Department of the Interior reworks some aspects of the sale’s environmental impact statement.

Statoil has said that during the 2010 open water season it plans to conduct a 3-D seismic survey focused on leases purchased in the lease sale, possibly followed by a 2-D survey over a broader area of the Chukchi. The company owns most of its leases in partnership with Italian major Eni Petroleum, with Statoil as operator.

Beyond leased area

In a statement filed with the district court on July 30, Martin Cohen, Alaska exploration manager for Statoil USA Exploration and Production Inc., said that Statoil’s survey would include a large area outside the company’s leases.

“Statoil estimates that its leases comprise approximately two percent of the total area that is the subject of the permits for the seismic survey; areas leased to others comprise approximately 33 percent of the total area; and areas not subject to lease comprise approximately 65 percent of the total area,” Cohen said.

But, although the Statoil surveys would be done under the terms of a Department of the Interior geology and geophysical exploration permit, rather than under the terms of oil and gas leases, uncertainty following the court injunction is delaying the issue of the G&G permit and the National Marine Fisheries Service incidental harassment authorization, both of which the company needs before the seismic survey can start, Cohen said.

And the Bureau of Ocean Energy Management, Regulation, and Enforcement, the recently formed successor agency to MMS, has said that it will not issue the G&G permit without clarification from the court on whether Statoil’s planned activities fall within the scope of the injunction.

Aug. 6 deadline

In his July 30 statement, Cohen said that if the company does not obtain the two remaining permits by Aug. 6 it will likely have to cancel its 2010 seismic program. The seismic survey will probably take 60 days to complete, but sea ice may form in the survey area by late September, Cohen said.

Also on July 30, BOEM filed a motion with the court, asking for expedited consideration of the clarification request by Aug. 3, bearing in mind the time constraints on Statoil’s plans.

On Aug. 2, without explanation, the court declined the BOEM request.

But, also on Aug. 2, the court did respond to a parallel request from Shell for clarification over that company’s planned 2010 Chukchi Sea activities. Following the imposition of a DOI Arctic outer continental shelf drilling moratorium, Shell has had to cancel its planned 2010 Chukchi and Beaufort Sea drilling programs. However, the company has been planning to continue with some Chukchi Sea environmental studies, geotechnical surveys and shallow hazard surveys during the 2010 open water season. In its Aug. 2 ruling the court agreed that Shell’s 2010 activities fall outside the scope of the injunction and can continue.

“The contemplated activity does not include drilling and may have the benefit of assisting the parties in determining the propriety of future activities,” Judge Beistline said.

—Alan Bailey

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State requests Chukchi reconsideration

The State of Alaska has also weighed in on the U.S. District Court injunction against exploration activities under oil and gas leases in the Chukchi Sea.

“There are enormous consequences for Alaskans if this development is stymied,” Alaska Gov. Sean Parnell said in a statement. “The public interest is in preventing the hardship Alaskans will suffer from lost jobs and economic growth if the injunction remains in place.”

Alaska is an intervening party in the lawsuit, arguing that the balance of interests weighs heavily in favor of the jobs, economic development and state revenue at stake, as opposed to minimal environmental risks with exploration.

Alaska Attorney General Dan Sullivan said that where jobs are affected but “risks to the environment are minimal … the U.S. Supreme Court has indicated that injunctions are not appropriate.”

In its brief requesting reconsideration the state noted that a lease confers the right to conduct only very limited activities, such as seismic testing, and that further administrative approval would be required for full-blown development.

—Kristen Nelson