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Vol. 19, No. 45 Week of November 09, 2014
Providing coverage of Alaska and northern Canada's oil and gas industry

Chukchi SEIS is out

BOEM uses enlarged development scenario, continues to support lease sale

Alan Bailey

Petroleum News

On Oct. 31 the Bureau of Ocean Energy Management published a draft version of its revised SEIS, or supplementary environmental impact statement, for the Chukchi Sea Lease Sale 193, held in 2008, in which Shell, ConocoPhillips, Statoil and other companies bought leases. The rework of the document followed an order by the federal District Court in Alaska in an appeal against the legality of the environmental impact statement for the sale, and hence against the legality of the sale itself. Leases sold in the sale are currently suspended, with exploration activities prohibited until the appeal is resolved.

The new SEIS affirms the holding of the lease sale as BOEM’s preferred action, based on an analysis of potential oil and gas activities in the Chukchi Sea and on an analysis of the potential impacts of those activities on the Chukchi Sea environment.

BOEM said that it will publish a notice of availability for the SEIS in the Federal Register on Nov. 7, an action that will trigger a 45-day public comment period for the document. After the end of the public comment period BOEM will have to revise the document in the light of comments received, before issuing a final version. There will then be a mandatory 30-day period before the agency can issue a new record of decision for the sale.

The District Court ordered the rework of the environmental analysis for the lease sale because it upheld a criticism that the Department of the Interior had underestimated the level of industrial activity that might result from the sale. The agency had proposed that the sale might lead to a single oilfield development with a potential output of 1 billion barrels of oil. The revised analysis in the new SEIS assumes oil production as high as 4.3 billion barrels.

New scenario

“In the analysis released today, BOEM used a new exploration and development scenario to evaluate the potential environmental effects of oil and gas activities associated with Lease Sale 193,” said BOEM Acting Director Walter Cruickshank when announcing the release of the revised document. “We look forward to receiving additional public input as we continue to take a balanced approach to the safe and responsible energy development in the region.”

Shell, the company spearheading efforts to explore in the Chukchi, welcomed publication of the revised SEIS.

“We appreciate the release of the draft and are reviewing it,” Shell spokeswoman Megan Baldino told Petroleum News in an Oct. 31 email.

Sen. Lisa Murkowski expressed her satisfaction that BOEM had completed the draft document.

“Today’s updated environmental impact statement for the Chukchi Sea is good news,” Murkowski said. “Hopefully this will satisfy the court and allow responsible drilling to resume next summer.”

Environmental organizations have a different perspective.

“As the climate crisis unfolds, walruses are cramming themselves onto Alaska beaches by the tens of thousands and polar bears are starving,” said Rebecca Noblin, Alaska director for the Center for Biological Diversity. “Adding noisy drill ships and the risk of oil spills to the rapidly melting Arctic is a recipe for disaster.”

Area unchanged

BOEM’s preferred action assumes a lease sale area identical to that in the original 2008 sale. The SEIS says that since the lease sale BOEM has received requests for the exclusion from leasing activities of some areas of particular environmental sensitivity, including an area known as the Hanna Shoal, off the northwestern corner of Alaska. But, going by the locations of leases sold in the lease sale, the Hanna Shoal is unlikely to see development, the SEIS says. And existing environmental mitigation measures associated with leases are adequate to protect wildlife such as the walrus, the principal species of concern, the document says.

Incremental development

In its new exploration and development scenario, prepared in response to the District Court’s order, BOEM has proposed that offshore development in the Chukchi Sea would proceed incrementally, an approach commonly used in frontier areas. As in the central North Slope, where the giant Prudhoe Bay oil field provided the economic underpinnings for initial development and then became the fulcrum for further oil fields, BOEM sees the need for a major anchor oil field in the Chukchi to justify the huge cost of building oil pipelines and other infrastructure needed to bring Chukchi oil to market. In determining where this anchor development and any subsequent development might take place, BOEM scientists evaluated the oil discovery and development potential of the 487 leases that were issued in the lease sale, the SEIS says.

The scientists concluded that it is possible that a leaseholder could find and develop an anchor field that contains 2.9 billion barrels of recoverable oil. The discovery and development of that field would be followed by the development of a single satellite field with 1.4 billion barrels of oil. Together these developments would entail the installation of eight oil platforms, and the drilling of 30 to 40 exploration and delineation wells and 400 to 457 production wells, the SEIS says. Given that both of these potential oil fields would be larger than any field in the Gulf of Mexico outer continental shelf, the development scenario represents the “high case” for potential oil and gas activity resulting from the lease sale, the SEIS says.

Many years to develop

Starting with the year in which initial seismic and other surveys take place for exploration of Chukchi Sea leases, BOEM’s Chukchi Sea scenario postulates that exploration and field delineation drilling could happen at any time between years three and 22. The drilling of production and service wells might take place between years 10 and 34. The installation of offshore and onshore pipelines for delivering oil to market might start in year six, with initial construction of a pipeline to the central North Slope completed by year nine. Offshore platform installation could take place at any time between year 10 and year 30. Natural gas pipeline construction would likely take place much later than the oil development and might start in year 27.

Based on this scenario, oil production from the Chukchi might start in year 10 and continue to year 53; gas production would run from year 31 to year 74. Oil production would peak somewhere between years 20 and 23, declining thereafter, the SEIS says.

Given the considerable difficulty and cost of operating oil tankers or liquefied natural gas carriers in the Chukchi Sea’s extreme environment, the scenario excludes consideration of using vessels rather than pipelines for delivering products to market.

Oil spill risk

When it comes to assessing the possible environmental impacts of BOEM’s postulated Chukchi Sea development scenario, a key question is the potential impact of oil spills - some people have questioned the feasibility of responding to an oil spill in the Arctic offshore, despite industry efforts to assemble major oil-spill response resources.

The SEIS says that small spills of less than 1,000 barrels can occur at any stage of oil exploration and development but would have negligible environmental impact, dispersing quickly and often being contained on a vessel or platform. The document says that two large spills involving more than 1,000 barrels of oil are likely to occur during the Chukchi Sea oil exploration and development scenario that BOEM has evaluated - the SEIS includes an assessment of the likely environmental impacts of spills of this size. Large spills are more likely to occur during oil development and production than during exploration, the SEIS says.

Very large oil spill

The revised SEIS, as in a previous version of the document, includes an assessment of the potential impacts of a hypothetical very large oil spill in the Chukchi Sea, a spill larger than 150,000 barrels, viewed as highly unlikely but having a major impact. Based on an assessment of the amount and type of oil that might flow from a Chukchi Sea oil well, should the well blowout and the well capping systems fail, BOEM estimates that oil flow might increase rapidly to as much as 61,000 barrels per day, quickly declining thereafter.

The SEIS, while describing a series of techniques that might be used to respond to such a spill, assumes that the discharge of oil would be ultimately stopped by the drilling of a relief well, to plug the out-of-control well. If the drilling unit that drilled the original well drills the relief well, it would likely take 39 days to plug the well, the SEIS says. If a second rig within the same drilling theater were to drill the relief well, that time-to-plug would extend to 46 days. The need for an out-of-region rig, from the Pacific Rim, could add another 28 days or so to the relief well project.

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