Alaska offshore plans should reflect conditions there, panel told

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Oct. 4 -- Concerns raised following the Apr. 20 Macondo well accident and subsequent oil spill in the Gulf of Mexico may not fully apply to activity off Alaska, witnesses told US President Barack Obama’s independent oil spill commission. They agreed that conditions are different that far north, but disagreed on whether to go ahead or wait.

“It was because of the lack of sufficient science in the Arctic and the reality of oil-spill response capabilities caused us to defer sales there,” US Interior Sec. Ken Salazar said on Sept. 27, adding that he has tried to take a slow and thoughtful overall approach there.

“The reality of the Arctic is that you don’t have the kind of US Coast Guard response we had in the Gulf of Mexico,” he told the committee. “You’re also operating in frigid conditions with floating ice in very narrow windows. On the other hand, you are dealing with depths that are much less than what we were dealing with in the Gulf of Mexico, with depths of 100-150 ft.”

The gulf accident which claimed 11 lives and massive spill which took months to contain and clean up clearly showed that better offshore workplace safety and environmental regulations are needed, US Sen. Mark Begich (D-Alas.) testified. “Unfortunately, the Obama administration’s moratorium in the Gulf of Mexico has had collateral impacts on Alaska, where exploration the Chukchi Sea has been delayed again,” he said.

Almost all of Alaska’s offshore oil resources are in relatively shallow water, and the amount of environmental review before work proceeds is tremendous, Begich declared. “In Alaska, we have a very robust state procedure and litigation procedure. At the end of the day, we’ve gone through enormous environmental reviews,” he said. “I sometimes joke that before the oil and gas industry does anything in Alaska, it is going to get sued.”

‘Important to decide’
Work in Alaska, where 80% of the government’s revenue streams are related to oil and gas, has slowed down while various commissions investigate the gulf accident and spill, he continued. The problem is that as we move into winter, companies are going to make decisions about what they’ll be doing next year,” Begich said. “As we move through the next 60-90 days, the amount of oil going through [the Trans-Alaska Pipeline System] continues to decrease and the volumes could get critically low. It’s important to decide whether new exploration will take place.”

Pete Slaiby, vice-president of exploration at Shell Alaska, said the company plans to drill two wells on its Arctic offshore leases in 2011. “We also will be doing a large body of work which has absolutely nothing to do with drilling, but everything to do with developing a scientific baseline,” he told the commission. “We will be looking at shallow hazards, continuing to gather ecological data to develop a flora and fauna baseline, continuing to develop ice currents, and understanding the creatures which inhabit the Arctic.”

Shell has always tried to prepare for low-probability, but high-impact, events, he said. “We will put in a place a plan which will be ready from the moment we start drilling. That doesn’t mean we won’t have other assets we can call up, but these will be ready from the moment the well is spudded,” Slaiby said. “Our oil-spill contingency plan has been reviewed by a number of people and meets their exacting standards. It has been exposed to the public through the coastal zone management process, where it has been extensively reviewed by North Slope Borough residents. We will keep our resources in place and exceed those standards.”

The North Slope Borough’s overriding concern continues to be the possibility of an oil spill and the resulting recovery work which would need to be done, Mayor Edward Itta indicated. “Our problem is that the equipment and technology that have been mentioned have never been tested up here in the Arctic under real conditions,” he said via telephone hookup from his office in Barrow. “There has never been any real exercise involving broken ice conditions and the recovery of oil. Neither has any burning been done up here.”

More baseline science
Specifically, Itta said more scientific research has been done on the Beaufort Sea than on the Chukchi Sea, where there has been “virtually none.” There hasn’t been enough baseline science to understand the impacts of oil and gas activity, Itta said. “The bowhead whales’ migration route goes right over the proposed wells. We have a pretty good count of the whales, but not of the walruses or seals,” he said.

Commission member Frances G. Beineke, president of the Natural Resources Defense Council, noted that proposals have been made to require 3 years of baseline data before allowing oil and gas activity in frontier areas. Ocean Conservancy Executive Vice-Pres. Dennis Takahashi-Kelso, who was an Alaska state government official when the tanker Exxon Valdez ran aground in Prince William Sound in 1989, said that 3 years of current data “are absolutely essential to assure that decisions about Arctic OCS development are better, and that we have the capacity to respond to spills and other emergencies.”

Severe Arctic conditions make it likely that a response gap exists there for most of the year, he testified. “Rapid changes in sea ice and weather conditions may impose severe restrictions on response options. Questions persist about the effects of dispersants on Arctic ecosystems, and the Arctic lacks facilities and equipment to respond,” he said.

Takahashi-Kelso identified two basic problems: Despite broad claims of being able to mobilize resources, there has never been a realistic test of the ability to respond. And the body of Arctic marine science is so limited and out of date that it’s impossible to understand what actually would happen to the environment, he said.

“Sec. Salazar has taken a valuable step in asking the [US Geological Survey] to study the situation, but that agency has not historically dealt with ocean conditions,” the Ocean Conservancy official said. “Oil and gas activities on the Arctic [Outer Continental Shelf] should be part of a broader effort such as that of the National Ocean Council, whose planning program provides a robust opportunity to consider these issues.”

USCG’s strategy
Capt. John R. Caplis, deputy commander of the US Coast Guard’s incident preparedness office in Long Beach, Calif., said USCG’s Alaska North Slope subarea contingency plan addresses three issues. USCG has been working with DOI, Alaska’s state government, and area residents and governments to make sure that resources are aligned, environmental impacts are recognized, and research and development keeps pace, he told the commission.

“I agree that it will require a joint effort. Industry will need to have a baseline to respond,” Caplis said. “The Coast Guard can respond when called. We have been doing a number of things through something called Operation Arctic Crossroads looking at other locations throughout the state. We do have tools and we are actively testing those to see how they perform. We also have a high latitudes operations study which we are in the process of completing.”

USCG helped Shell Alaska develop its plan, Slaiby said. “We work in probably 50 other countries in [exploration and production]. Many have regulations. Many do not,” he told the commission. “We know the Coast Guard will be ready to come in and take its place at the center of the unified command structure. In the meantime, we would begin to prepare to drill a relief well and otherwise respond to a spill.”

He said Shell Alaska has proposed a containment system which would not be as large as would be used in the gulf, but would be readily available with blowout preventer testing every 7, instead of 14 days. Shell also has raised the research bar by participating with other major US oil companies in a consortium to develop and build better spill containment systems, he added. “We agree that to put more development in, you need more science. But we also believe the existing science supports exploration drilling,” Slaiby said.

“I think it’s important to not confuse the commitment to respond with the effectiveness,” responded Takahashi-Kelso. “The issue is what [an offshore well operator] actually does in the spill in producing recovery. Exxon committed a substantial amount of resources to recovering oil in Prince William Sound and recovered only about 10% of the oil.”

Able to respond
“We’ve been working in the Arctic for half a decade to address these questions,” Slaiby said. “We support the Coast Guard’s presence, but believe it can discharge its responsibility under [the 1990 federal Oil Pollution Act] because its base in Kodiak is only 4 hr away by plane. We also have demonstrated we can drill fewer wells to produce more oil.” He said that Shell Alaska does not expect its wells to be the size of those in the Gulf of Mexico, but it does expect to comply with Notice to Lessees No. 6 which DOI issued in June and have the capacity to respond to the worst scenario that the regulation requires.

Shell Alaska also has designed its spill response to tackle a spill at its source, he continued. “With respect to ice, there have been a series of ice tests, unfortunately not in this country but in Norway. In the event of this unlikely event, all gloves will come off and we would deploy all of our oil spill and icebreaker technology to keep the oil away from the area. We would apply booms where applicable and burning otherwise. Colder temperatures also make it easier to ignite oil in the Arctic,” Slaiby said.

“In Alaska, the response plans that have been laid out go through several components,” said Begich. “I don’t question that the Coast Guard is an important factor, but it facilitates responses which came primarily from the industry. There’s no question that the requirements they have and will have will be more significant than what’s required in the gulf. But it also is dealing with shallower depths.”

If the oil and gas industry knows what the regulations are, it can make the necessary plans, the federal lawmaker continued. “At the rate the administration is going, it will be March of next year before it will know,” he said. “All we ask is that if there’s a different approach in the Beaufort and Chukchi seas, lay it out. These are companies that can go elsewhere if they don’t have an idea of what’s expected.”

Slaiby reminded the commission that the resources which are at stake off Alaska are substantial. “The prize is about 25 billion bbl of oil and 25 tcf of natural gas,” he observed.

Contact Nick Snow at nicks@pennwell.com.

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