Environmental regulation could change Shell's plan for drilling in Alaska's Arctic

A key permit issued on Tuesday by the Obama administration appears to dash Shell's ambitions to use two rigs to drill simultaneously in the Chukchi Sea off Alaska's Arctic Coast this summer.

The setback comes in an incidental-take authorization ?issued by the U.S. Fish and Wildlife Service that allows Shell to disturb polar bears and walruses -- but the permit includes a caveat prohibiting rigs from drilling within 15 miles of each other, in compliance with a pre-existing regulation.

Shell's exploration plan, approved by the Bureau of Ocean Energy Management in May, proposes using both the Noble Discoverer and Polar Pioneer rigs to drill at the same time at multiple wells at the company's Burger prospect. Shell is seeking to complete the single Chukchi well it started in 2012 and to complete five others with its fleet of two rigs and numerous support vessels.

Shell's Burger well sites are fairly close together, as the entire Burger prospect lies in an area with a diameter of roughly 20 miles, and the drill sites are clustered tightly within that prospect, according to a map included in the company's exploration plan.

A Department of Interior spokeswoman said it will not be possible for Shell to drill simultaneous wells and be in compliance with the letter of authorization and its 15-mile buffer provision.

Under the letter of authorization, "Shell is not permitted to conduct drilling operations from two rigs simultaneously within 15 miles of each other," Interior spokeswoman Jessica Kershaw said.

"Shell could meet the 15-mile requirement if they were to drill wells sequentially," she said. "That's up to them to decide."

The two wells that Shell is seeking to drill first in this year's program are 9 miles apart, Kershaw said.

The 15-mile buffer between operating drill rigs is specific to the Chukchi and intended to protect migrating and foraging walruses.

That provision is not new, but it has never been an issue of contention in the past because there had never been two separate rigs drilling at the same time in the Chukchi.

Prior to Shell's 2012 drill program, in which the top-hole portion of a Burger well was drilled, only five wells had been drilled in the Chukchi, and none of them simultaneously, according to BOEM historical records. Only once in the past, in 1989, were two wells ever drilled in a single year in the Chukchi, and those were drilled sequentially by Shell, according to records.

The restriction is included the latest version of the Fish and Wildlife Service's incidental-take regulation -- put into place in 2013, after a public-comment period, and effective until 2018. It was also in the regulation that was in effect from 2008 to 2013, Kershaw said.

"Incidental take" under the Marine Mammal Protection Act means any kind of unintentional disturbance to a protected animal, ranging from accidental harassment that causes an animal to change behavior to an accidental death.

Shell or regulators might have overlooked the 15-mile buffer requirement when drafting or reviewing the exploration plan, said Chris Krenz, senior scientist and Arctic campaign manager at the environmental organization Oceana.

"What's interesting is Shell put in comments over this rule and on this issue, even. We believe they should have been well aware of this," Krenz said.

In comments submitted in February 2013, Shell said there was "no basis" for the 15-mile separation.

Krenz said it is disturbing the approval process has gone this far without sufficient attention to the simultaneous drilling problem.

"What we believe is the prudent approach for the administration to take is to revoke the conditional approval they did on the exploration plan, considering they didn't do a complete analysis of the impacts to walruses and polar bears," Krenz said.

Shell spokesman Luke Miller said the company is considering its options under the incidental-take restrictions imposed by the Fish and Wildlife Service.

"We are evaluating the Letter of Authorization issued today and will continue to pursue the 2015 program that was conditionally approved by the Bureau of Ocean Energy Management in May. That includes drilling in the Chukchi Sea once open water permits," Miller said in an email.

Shell is hoping to start drilling in the third week of July, based on in-house ice forecasts, Miller said.

That would be much earlier in the season than Shell's startup of drilling in 2012. Shell was not able to start drilling until September of that year.

This year, Shell has already started moving its fleet into position for summer drilling. The Polar Pioneer, a contracted drill rig that was the subject of anti-drilling protests when it was moored in Seattle, arrived early Saturday morning in Dutch Harbor, Miller said. The Noble Discoverer departed Everett, Washington, on Tuesday and is bound for Alaska, he said.

The company hopes to start moving ships into the Bering Strait region after the first week of July, Miller said.

"We remain committed to operating in a safe, environmentally responsible manner and look forward to exploring our Chukchi leases in the weeks to come," he said in an email.

Shell does have several other key permits it needs to start drilling, including an incidental harassment authorization from the National Marine Fisheries Service that allows for accidental disturbances to whales and seals. That authorization was issued on June 12.

Shell has submitted applications for permits to drill, or APDs, for each of four planned wells in its exploration program, Kershaw said. Those well-specific permits fall under the jurisdiction of Interior's Bureau of Safety and Environmental Enforcemen, which is currently evaluating the APDs for the first two wells Shell wants to drill, Kershaw said.

Yereth Rosen

Yereth Rosen was a reporter for Alaska Dispatch News.