ConocoPhillips on Wednesday put on hold plans to explore Alaska’s Chukchi Sea in 2014, “given the uncertainties of evolving federal regulatory requirements and operational permitting standards.”
The Alaska arm of the Houston producer said “it would not be prudent at this time to make the significant monetary commitments needed to preserve the option to drill in 2014.”
Just last month the Interior Department’s Bureau of Ocean Energy Management said it was reviewing an exploration plan by ConocoPhillips that might allow drilling to begin in the Chukchi next year (see Daily GPI, March 12).
“While we are confident in our own expertise and ability to safely conduct offshore Arctic operations, we believe that more time is needed to ensure that all regulatory stakeholders are aligned,” said ConocoPhillips Alaska President Trond-Erik Johansen.
ConocoPhillips wants to dive into the Devils Paw prospect about 80 miles offshore Alaska in an area south of the Burger field, where a subsidiary of Royal Dutch Shell plc dropped a drillbit last summer in its short-lived inaugural project (see Daily GPI, Feb. 28; Aug. 31, 2012).
Shell was to have continued drilling projects in the Chukchi and Beaufort seas this year but it also has put its Alaska offshore programs on hold. Last month Interior sharply criticized Shell’s Alaska program for failing to maintain “adequate oversight” of its contractors and for problems with its equipment (see Daily GPI, March 18).
A recent Department of the Interior report called on industry and government to work together to develop an Arctic-specific model for offshore oil and gas exploration in Alaska, ConocoPhillips noted. The model would focus on standards in the areas of drilling, maritime safety and emergency response equipment and systems.
“We welcome the opportunity to work with the federal government and other leaseholders to further define and clarify the requirements for drilling offshore Alaska,” Johansen said. “Once those requirements are understood, we will reevaluate our Chukchi Sea drilling plans. We believe this is a reasonable and responsible approach given the huge investments required to operate offshore in the Arctic.”
Alaska Republican Sen. Lisa Murkowski said she was “disappointed that ConocoPhillips won’t be moving forward with its Arctic program next year. Alaska and the nation need the energy and the jobs that new oil production off Alaska’s coast would bring, but it’s a decision that’s not unexpected.
“Companies can’t be expected to invest billions of dollars without some assurance that federal regulators are not going to change the rules on them almost continuously. The administration has created an unacceptable level of uncertainty when it comes to the rules for offshore exploration that must be fixed if we’re going to end our dependence on oil from the Middle East.”
ConocoPhillips was awarded 98 exploration leases in the Chukchi Sea’s Outer Continental Shelf in 2008. The company, Alaska’s largest oil producer, has more than 50 years of experience exploring the Arctic for oil and gas in the onshore and offshore, it noted. It operates the Kuparuk and Alpine oilfields and maintains a working interest in the Prudhoe Bay unit and the Trans Alaska Pipeline System.
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