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Vol. 17, No. 34 Week of August 19, 2012
Providing coverage of Alaska and northern Canada's oil and gas industry

Shell continues to delay drilling, waiting for containment barge

Although Shell has sent three of the vessels from its Arctic drilling fleet north to the Chukchi Sea, in preparation for its planned outer continental shelf exploratory drilling, the company’s drilling program remains on hold, waiting for the completion of retrofit work on the company’s containment barge, the Arctic Challenger, and U.S. Coast Guard certification of the vessel.

The company has installed its new Arctic oil containment system in the barge as part its oil spill contingency arrangements. And before the vessel can depart Seattle, where the system retrofit is being done, all work on the vessel must be completed and the Coast Guard must certify the vessel as safe for its intended use.

“Progress related to the final construction of the Arctic Challenger containment barge remains steady,” Shell spokesman Curtis Smith told Petroleum News in an Aug. 15 email. “We continue to work closely with the U.S. Coast Guard to outline a schedule for final inspections and an on-water deployment that would lead to certification. There’s no set timeline for the completion of this important process.”

Site preparation

The vessels that have already headed north will prepare Shell’s planned drilling sites in the Chukchi and Beaufort seas for the arrival of the Noble Discoverer and Kulluk drilling vessels, both of which remain at Dutch Harbor in the Aleutian Islands for now. Site preparation includes the positioning of the anchors for the rigs, Smith said.

Shell had planned to drill up to three wells in the Chukchi Sea and up to two wells in the Beaufort Sea this year. But because of the delayed start to the drilling season the company has scaled back its expectations to one well in each sea. However, the company has said that it may also drill some top holes for other wells, to achieve a head start on next year’s drilling.

Before it can start drilling in the Chukchi Sea Shell also needs a compliance order from the Environmental Protection Agency, following a request for some changes to the air quality permit for the Noble Discoverer drillship. Shell has also requested changes to the air permit for the Kulluk, the floating drilling platform earmarked for use in the Beaufort Sea — the company can use the Kulluk meantime, pending an EPA ruling on the Kulluk permit changes.

This year the Chukchi Sea has experienced exceptionally heavy early summer ice and Shell has said that the ice would have prevented the start of Chukchi Sea drilling in July as originally planned, regardless of the situation with the containment barge.

Salazar comments

During an Aug. 13 press conference Secretary of the Interior Ken Salazar, who had just returned from a visit to the North Slope, said that the waters in the area of Shell’s planned Chukchi Sea drilling are now clear of ice. At this point it is the need to complete work on the containment barge, and not sea ice, that is delaying the drilling, Salazar said.

“It’s not the ice conditions that have held up the effort in terms of moving forward,” Salazar said. “It’s the necessity for Shell to be able to demonstrate that they have met the regulatory requirements we have put into place, and those regulatory requirements must be met. If they are not met there will not be a Shell exploration effort that will occur this year.”

Salazar said that Interior still needs to make decisions on Shell’s applications for drilling permits and that at this point Shell has not presented any alternative plan, such as the drilling of top holes.

“If they present an alternative we’ll take a look at it, but right now the plan as I have understood it is that they are still moving forward to get their containment vessel certified and their plans are still to move forward with the drilling of an exploration well or two up in the Chukchi and in the Beaufort Sea,” Salazar said, adding that Interior would ensure that any requested change to Shell’s plans meets the appropriate regulations and that the environment of the Arctic is protected.

Little risk of spill

“The exploration that takes place, if it does take place, will take place under the most cautious, highest guarded activity ever in the history of any kind of ocean energy development,” Salazar said. “So I’m not very concerned frankly that we are going to have any kind of an oil spill by these closely guarded exploration activities.”

The larger questions that need to be addressed over a longer period of time, before any outer continental shelf development takes place, include issues such as the local infrastructure and Coast Guard capabilities, Salazar said.

And, with environmental conditions in the Arctic in a state of flux under the effects of climate change, science will be critical to future decision making, he said.

Meantime, the current situation with Shell is dynamic.

“We don’t know yet what will be happening this summer, what will be happening in the next 10 or 20 days,” Salazar said. “We don’t have an alternative from them. … I will hold their feet to the fire in terms of making sure that we are doing everything we can do abide by the standards and regulations we have set and to make sure that the environment in the Arctic seas is protected.”

—Alan Bailey

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