Shell Oil seeks additional time for drilling in Chukchi Sea

New data indicate ice conditions allow more time, company says.

Anchorage Daily NewsAugust 27, 2012 

With summer slipping away and the window for its Alaska drilling plans beginning to close, Shell Oil Co. has asked federal regulators to extend the drilling season in the Chukchi Sea by a couple of weeks.

It also is looking into starting work at Arctic well sites before an oil spill containment barge is in place, though it doesn't intend to drill in any zones containing oil or other hydrocarbon liquids before the vessel arrives, a Shell spokesman said Monday.

Shell is trying to salvage what it can of its 2012 drilling program for the Alaska Arctic despite delays related mainly to issues with the barge. It now plans to drill perhaps two exploration wells instead of five but also hopes to start constructing others to complete next year.

The second of Shell's two Arctic drilling rigs, the Noble Discover, left Dutch Harbor on Saturday for its Burger prospect in the Chukchi Sea. The Kulluk, which left earlier, is about halfway to Shell's Beaufort Sea prospect.

The rigs' transit represents "one of many operational milestones we hope to achieve in the days that remain in Alaska's open water season," Shell spokesman Curtis Smith said in an email.

Last week, Shell asked the federal Bureau of Ocean Energy Management to alter one of the special conditions placed on its exploration plan for the Chukchi Sea and allow it to continue drilling into oil-rich zones past the current deadline of Sept. 24, according to Jeffery Loman, an Anchorage-based senior special adviser in the federal agency.

The current deadline was based on a disaster scenario that Shell says is unlikely and that both Shell and regulators are trying hard to prevent: a big oil spill.

If a well blowout occurred, Shell has estimated it would need as long as 38 days to drill a relief well and kill the flow. And that needs to happen before freezeup at sea. In December, the federal bureau estimated that Nov. 1, 2012, was likely the earliest date for sea ice to cover the Shell drill sites in the Chukchi. It set Sept. 24 as the last date for drilling in oil-rich geological zones.

Now Shell scientists, using more current data, are predicting that the ice won't be a factor until around Nov. 18-20 and have asked to drill for longer, Loman said.

Shell's Smith said in an email that its "current sea ice forecast models are also consistent with, and corroborated by the ... National Weather Service and an independent forecast prepared by a professor at the University of Colorado."

The Bureau of Ocean Energy Management, which oversees offshore exploration and development, hasn't made a decision yet on the request, Loman said.

Shell already can drill until Oct. 31 in the Beaufort Sea, where its drilling sites are much closer to shore and easier to access, though it must clear out during whaling season. It can operate in both seas until Oct. 31 doing preliminary well construction or finishing up with instrument work on what's already drilled.

But it still doesn't have required drilling permits in hand for individual wells. The main holdup has been its unique oil spill containment barge, the Arctic Challenger. Shell, through contractor Superior Energy Services, is retrofitting the 38-year-old vessel at a Bellingham, Wash., shipyard but the project is taking far longer than expected.

As of Monday afternoon, the barge was nearly complete but two major issues still must be addressed before the Coast Guard will issue a needed certificate of inspection, said Lt. Cmdr. Jamie Frederick.

The release mechanism for one of the barge mooring lines does not operate correctly, he said. And an analysis indicates that the generators operating ship systems including fire pumps cannot sustain that power load, Frederick said.

Still, most of the systems on the complex barge are complete and have passed inspection, he said. The oil spill containment system may be tested early next week. But the barge cannot get under way until the issues with the anchor release and the generators are resolved, Frederick said. The journey will take at least two weeks, Shell has said.

The barge and containment system must win approvals before Shell can get its drilling permits. Shell, meantime, has notified regulators that it believes it can begin well construction before the Arctic Challenger arrives in the Arctic though it won't drill into oil-rich zones until then.

Shell's massive effort in the Alaska Arctic is being closely watched. It has spent nearly $5 billion on leases, ships and supplies. It is the first oil company to attempt drilling offshore in the Alaska Arctic in two decades.

Sen. Lisa Murkowski, R-Alaska, is a big supporter of offshore drilling but on Monday told reporters that Shell must do it right.

"And an effort to preempt or to expedite in a manner that would put anything in jeopardy -- I don't think anyone is willing to do that, whether you are the secretary of the Interior or the president of Shell or whether you are sitting here in my shoes."

She indicated she agreed with recent statements by Interior Secretary Ken Salazar that Shell is responsible for some of the delays.

"Shell shoulders some of that responsibility for the fact the containment barge is not done," Murkowski said.

But she thinks that the issues will be resolved and that Shell will begin its offshore exploration work at sea this year.


Reach Lisa Demer at ldemer@adn.com or 257-4390.

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