Royal Dutch Shell plc on Thursday was awarded conditional approval by the Department of Interior to drill up to four exploratory wells over two years in northern Alaska’s Beaufort Sea, where it has invested more than $3.5 billion in leases and predevelopment.
Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) Director Michael Bromwich said Shell, which is the biggest leaseholder in Alaska’s offshore, may begin exploring the area in July 2012 once it obtains required permits.
“We base our decisions regarding energy exploration and development in the Arctic on the best scientific information available,” Bromwich said. “We will closely review and monitor Shell’s proposed activities” to ensure the producer’s operations are “conducted in a safe and environmentally responsible manner.”
Based on its review of the plan, “new information that included extensive input from stakeholders, and previous National Environmental Policy Act analyses, BOEM found no evidence that the proposed action would significantly affect the quality of the human environment,” the approval stated. “Therefore, BOEM determined that an environmental impact statement was not required, and issued a Finding of No Significant Impact, a key step in the approval…”
The U.S. Environmental Protection Agency (EPA) already has released for public review draft air quality permits for Shell projects planned in both the Beaufort and Chukchi seas. Shell also will need to obtain approvals for some of its activities from the U.S. Fish and Wildlife Service and the National Marine Fisheries Service.
Obtaining approvals from all of the required parties has proved to be challenging. Shell last year had come close to completing the required permit applications but fallout from the Macondo well blowout in the Gulf of Mexico (GOM) scuttled those plans. Shell originally planned to drill its first Beaufort well this summer but it again dropped the proposal after two required air quality permits were revoked by the Environmental Appeals Board (see Daily GPI, Feb. 4; Jan. 5). The board faulted the EPA for not reviewing fully the potential emissions from a drillship and support vessels. Shell then resubmitted its exploration plan in May to specifically target shallow waters of the Beaufort Sea’s Camden Bay, which is about 150 feet deep (see Daily GPI, May 6).
Shell spokeswoman Kelly op de Weegh said the conditional approval is “welcome news and adds to our cautious optimism that we will be drilling our Alaska leases this time next year.” She said BOEM was “thorough in its scientific and technical analysis of our plan and we look forward to continued progress as we pursue the permits necessary to drill.”
In response to critics of the Arctic drilling plan, Shell said if necessary it is ready to deploy “the most robust Arctic oil spill response system known to industry.” Shell’s oil spill response capability exceeds a “calculated worst-case discharge volume” for the proposed wells. Shell has committed to building an oil spill capping system to capture hydrocarbons “in the extremely unlikely event of a shallow water blowout.” Shell also promises to use “world-class technology and experience to ensure a safe, environmentally responsible Arctic exploration program, one that has the smallest possible footprint on the environment and no negative impact on North Slope or Northwest Arctic traditional subsistence hunting activities.”
In related news, U.S. subsidiary Shell Oil Co. also has secured another permit to drill in the deepwater GOM, which will enable the oil major to put the last of five rigs idled by the Macondo well blowout back to work. The permit is for a new well at the Europa field in Mississippi Canyon blocks 934, 935, 890 and 891, which is about 140 miles southeast of New Orleans in 3,900 feet of water. Shell originally outlined plans to develop the field in 1998 (see Daily GPI, March 20, 1998). Production is to be tied back to the company’s massive Mars tension leg platform, which is about 20 miles away.
“With this permit…we can return more of our employees and contractors to their jobs,” a Shell spokesman said. “We want to acknowledge the ongoing work and progress with the Bureau of Ocean Energy Management, Regulation and Enforcement to reach this important milestone, and we remain committed to the offshore and our safe operating practices.”
Shell had idled five offshore rigs after federal regulators enacted a deepwater drilling moratorium in the GOM. With the Europa well approval, the producer said all of the rigs it had working pre-Macondo now are back to work. Shell operates the Europa field with a 34% stake. Other stakeholders are BP plc (33%), Eni SpA subsidiary Agip (32%) and ConocoPhillips (1%).
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