BOEM conditionally approves Shell's Chukchi Sea exploration plan

The US Bureau of Ocean Energy Management conditionally approved Shell Gulf of Mexico Inc.’s revised exploration plan for its leases in the Chukchi Sea off Alaska on Dec. 16. Shell and Alaska government officials immediately questioned the necessity of one condition that would shorten the drilling season there.

A Shell Alaska spokesman said the conditional approval was an important step in the company’s effort to start drilling its Chukchi Sea leases—which it acquired in a 2008 sale—in July 2012. The company is still evaluating the approval’s conditions, including the one that potentially limits the drilling season, he said. “We are concerned this unwarranted restriction could severely impact our ability to deliver a complete Chukchi program,” the spokesman said.

BOEM said the condition was designed to mitigate the risk of an end-of-season oil spill by requiring Shell to leave sufficient time to implement cap and containment operations as well as significant clean-up before the onset of sea ice, in the event of a loss of well control. It said Shell must cease drilling into zones capable of flowing liquid hydrocarbons 38 days before the first-date of ice encroachment over the drill site, given current technology and weather forecasting capabilities.

Based on a 5-year analysis of historic weather patterns, BOEM said it anticipates Nov. 1 as the earliest anticipated date of ice encroachment. The 38-day period would also provide a window for the drilling of a relief well, should one be required, BOEM added.

Additional steps

The company still must satisfy those conditions as well as obtain the US Bureau of Safety and Environmental Enforcement’s approval of its oil spill response plan and well-specific drilling permits, BOEM said. It said Shell also will have to take measures to increase safety and confirm the availability of response equipment, including a well capping and containment system, and to ensure that Shell takes important steps to avoid conflicts with subsistence activities. It also must also obtain necessary permits from the US Environmental Protection Agency, the US Fish & Wildlife Service, and the National Marine Fisheries Service, BOEM said.

Alaska government officials quickly criticized the provision. “I am deeply concerned that curtailing an already-short drilling season will put the entire project in jeopardy, cost jobs, and ultimately result in more dependence on foreign oil, which serves neither Alaska nor our country,” Gov. Sean Parnell (R) said. “This is yet another example of federal regulatory overreach that may unnecessarily hamper economic development for our state, and reduce our ability to produce more domestic energy.”

US Senate Energy and Natural Resources Committee Ranking Member Lisa Murkowski (R-Alas.) suggested that the condition seemed to be more a response to newspaper ads than founded on science. “This arbitrarily curtails an already very short drilling season, unnecessarily putting the project at risk,” she warned.

Alaska’s other US senator, Democrat Mark Begich, called the provision short-sighted and possibly influenced by election year politics. “I am disappointed that the administration has diverted from months of positive progress and thrown this last-minute monkey wrench into Arctic development,” he said. “Alaska has done offshore exploration before, we’ve done it safely, and the technology is better now than it has ever been.”

‘Devil in the details’

Republican Don Young, the state’s at-large US House member, said that while BOEM’s conditional approval might seem positive at first glance, “the devil is in the details.” He said, “What Alaskans and the companies who have invested billions of dollars are looking for is certainty and progress, and unfortunately this ‘conditional’ approval won’t bring much of either. The fact is that Alaskans know how to do this in a safe and responsible way, and to ignore the progress that has been made to increase safety and technology is short-sighted.”

Environmental organizations, meanwhile, condemned BOEM’s conditional approval of Shell’s Chukchi Sea exploration plan as the latest in a series of reckless Obama administration decisions about oil and gas activity in US Arctic Ocean waters.

“BOEM has stuck its head in the sand and rubber stamped Shell’s plan without any thoughtful review or apparent care for our oceans,” said Michael LeVine, Pacific senior counsel for Oceana. “This approval makes a mockery of [US Interior Sec. Ken Salazar’s] stated commitments to science, the legal obligation to be prepared for a spill, and the basic idea of government as stewards of public resources. Every commission, committee, and review other than those prepared by BOEM and the oil industry has shown that we are not ready to drill in the Chukchi Sea.”

Rebecca Noblin, Alaska director for the Center for Biological Diversity, stated, “It’s a sure sign that our thirst for oil has clouded our ability to reason when we start thinking it’s a good idea to drill for oil in the harshest environment on earth. Rather than looking for the next risky fossil fuel fix, the Obama administration should be working to give Americans a clean energy future. A decision to drill in the Arctic is a decision to destroy it.”

Contact Nick Snow at nicks@pennwell.com.

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