On a drilling ship 70 miles from land in the Chukchi Sea, Shell Alaska on Saturday was poised to begin what it's planned for and fought over the last six years: Drilling offshore in Alaska.
It has won legal challenges, cleared regulatory hurdles and spent nearly $5 billion. Now Shell can start working on a single well at its Burger prospect.
It's retrofitted vessels for the Arctic, including the converted log carrier that is now functioning as the drilling rig Noble Discoverer. It still is working on final approvals for another key reconfigured vessel, an oil spill containment barge that has taken months longer than expected to complete but should undergo sea trials early in the week.
"Happy, happy, happy," said Pete Slaiby, Shell's vice president for Alaska. He gave a series of interviews Saturday to reporters from around the country following Shell's difficulties and progress.
"This is such a big deal," he said. "It is opening up potentially a new chapter in Alaska's oil and gas story."
The U.S. Geological Survey estimates a potential resource of 25 billions to 27 billions of barrels of oil in the Chukchi and Beaufort seas.
For Shell, 900 people are working on ships and on shore to support the operation, with a like number poised to rotate in, Slaiby said.
Two inspectors from the federal Bureau of Safety and Environmental Enforcement -- which oversees well construction and oil spill response -- are on the drilling rig. One will be on board around the clock as drilling progresses. They have the power to shut down operations if they see anything unsafe. The oversight is ramped up for Alaska's fragile Arctic. In the Gulf of Mexico inspectors generally don't stay overnight on rigs.
"We're basically in full deployment," Slaiby said.
Starting Thursday, the Discoverer was secured to eight anchors already set on the sea floor above the Burger prospect. Company geologists have called Burger Shell's crown jewel in the Arctic. Shell also holds leases in the Beaufort Sea and has staged its conical drilling rig designed for the Arctic, the Kulluk, in the area. But it can't drill there until whaling season ends.
Crews began Saturday in mist and fog. Well foundational work will take about two weeks.
They call the operation "spudding a well -- our jargon for starting a well," Slaiby said.
WIDER AND DEEPER
Crews started the day by launching a remotely operated vehicle to check below the seafloor for any hazards.
Under a drilling permit granted Aug. 30 by the U.S. Department of the Interior, Shell can only drill to about 1,400 feet until its oil containment barge, the Arctic Challenger, is fully inspected and in the area. It will have to stop about three-fourths of a mile short of oil-rich zones.
First crews are drilling a narrow, 8 1/2 inch pilot hole an estimated 1,400 feet below the seafloor to check for any unexpected natural gas pockets or oil, or any obstructions. Should drillers hit something, they have drilling mud at the ready to seal off the hole.
That pilot hole becomes the center of the well. Crews then go wider, drilling a hole 36 inches wide and 350 feet deep. With a giant tool weighing several tons, a 20-foot-by-40-foot mud-line cellar then is excavated out of the seafloor on top of the pilot hole. It will hold an essential piece of safety equipment, the blowout preventer, which in offshore Alaska must be placed deep enough to avoid being scoured by ice.
Steel conductor pipe then is placed into the hole and cemented into place to support the blowout preventer, designed to cope with erratic pressures and control or seal off the well.
Drillers then go deeper, working through the blowout preventer and the steel pipe and boring through the subsea mass with a 20-inch bit down to 1300 or 1400 feet. They install casing and cement it in.
That foundational or top hole work is as far as Shell can go until its oil spill containment barge is complete.
Shell's every move is under scrutiny and challenge.
After the well was approved, a number of environmental groups immediately criticized the decision as risky and ill-advised, considering the barge still isn't in place. Regulators were caving to pressure, they said.
Almost all significant government decisions involving Shell's Arctic plans are challenged in court. Slaiby noted that ultimately, court rulings have allowed the project go forward.
Another safety apparatus, the capping stack, was tested earlier in Washington state and now is sitting on the Fennica, an icebreaker that is part of the Shell fleet in the Arctic. Counting its drilling ship, Shell has seven vessels in the Chukchi so far.
The device functions as a second blowout preventer. It would be lowered over an out-of-control well to kill it, the method eventually used in the 2010 Deepwater Horizon blowout. Regulators began requiring capping stacks after that.
A watchdog group has pounced on the capping stack tests, calling them sorely inadequate. Public Employees for Environmental Responsibility, or PEER, sued to get the testing data.
The Bureau of Safety and Environmental Enforcement, or BSEE, said the tests "were crucial for ensuring that this piece of Shell's safety equipment is fully operational and able to be quickly and effectively deployed if necessary."
The capping stack was lowered from the Fennica into Puget Sound about 200 feet, which is deeper water than Shell's wells will be in in the Arctic. It was returned to the ship. Pressure tests then were done with it out of the water, including a 15-minute test at 10,000 pounds per square inch.
"To say that these tests were rigorous or comprehensive is certainly a stretch," retired University of Alaska professor Rick Steiner, an expert in oil spill response who is on the PEER board, said in a statement. "A simple emissions test report for my car is far more rigorous than what BSEE has produced for Shell's Arctic capping stack."
A lawyer for Public Employees for Environmental Responsibility sued for the records on Steiner's behalf and echoed the concerns.
"The first test merely showed that Shell could dangle its cap in 200 feet of water without dropping it," the group's staff counsel, Kathryn Douglass, said. "The second test showed the capping system could hold up under laboratory conditions for up to 15 minutes without crumpling. Neither result should give the American public much comfort."
Slaiby, who tends to be even-keeled, bristled at the criticisms. The capping stack was the result of thousands of hours of engineering and planning, and was successfully deployed, he said.
A similar model was latched to a test wellhead in the Gulf of Mexico in July during a trial run overseen by BSEE, he said.
The test of the Arctic-specific capping stack "dovetails brilliantly with the work done in the Gulf of Mexico in July," Slaiby said.
"This has been planned and engineered to the last detail," he said. "To downgrade the tests that happened out the back of the Fennica is a great disservice."
SEA TRIALS COMING
BSEE officials also back up their inspection, saying the highest pressures Shell expects to encounter in the Chukchi are 3,000 pounds per square inch, 7,000 psi lower than the level tested.
"The tests conducted, and verified by BSEE, showed that Shell could successfully deploy the capping stack to 200 feet of water, deeper than their proposed well sites in the Arctic while also confirming that the capping stack would function properly under pressures exceeding the maximum expected pressures they will encounter," BSEE said in response to questions.
Similar tests are routine on blowout preventers and capping stacks in the Gulf of Mexico, officials said.
Meanwhile, officials were traveling from Anchorage to Bellingham, Wash., for sea trials of the Arctic Challenger. The oil spill containment barge would be used only if the blowout preventer and capping stack both failed.
The barge carries a containment dome that would be lowered to the spill site and work like a vacuum. It would suck up oil and flow it through an attached hose back to the barge, where it would be separated from seawater and the gas would be flared, like a mini-production system.
Shell knows it's under great scrutiny and is moving cautiously, Slaiby said.
"You build confidence by the spoonful," he said.
Drilling was supposed to begin mid-day Saturday, but between attempted crew changes, the weather and an effort to precisely position the drilling rig over the Burger prospect, the drilling bit hadn't reached the seafloor by mid-evening.
At any rate, the exploration well will "never, never, never" be put into production, Slaiby said. It's a simple well designed differently than one that would produce oil long term.
Once drillers reach oil-rich zones and Shell knows what it has, the well will be permanently capped and abandoned.
Reach Lisa Demer at email@example.com or 257-4390.
By LISA DEMER
Anchorage Daily News