Shell Gets Conditional Approval for Its Plan to Explore for Oil in Arctic Offshore in 2015

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By Alan Kovski

May 11 — A plan by Royal Dutch Shell Plc to explore for oil this summer in the Chukchi Sea received conditional approval May 11 from the Bureau of Ocean Energy Management.

Shell still must obtain permits from other federal agencies, including a drilling permit from the Bureau of Safety and Environmental Enforcement, as well as state regulatory clearance.

BOEM's approval was conditioned on Shell's receipt of those regulatory steps and a set of other environmental protection and reporting requirements, notably some marine mammal protective measures that the agency described as typical.

Along with the approval, BOEM issued an environmental assessment and a finding of no significant impact, a finding that averts the need for an environmental impact statement, which can take more than a year.

The Shell plan is to drill as many as six exploration wells at the Burger prospect in the Chukchi Sea, where the open-water drilling season runs approximately from July 1 to Oct. 31. In the ice-shortened 2012 drilling season, Shell drilled one well at that site to a depth of 1,505 feet.

Greenpeace Ordered to Stay Away 

The approval of the exploration plan came three days after another minor victory for Shell. A federal judge May 8 issued an injunction requiring the activist group Greenpeace and allies to stay away from Shell's drilling operations (Shell Offshore Inc. v. Greenpeace Inc., D. Alaska, No. 3:15-cv-00054, 5/8/15).

The U.S. District Court for the District of Alaska issued an order establishing safety zones around the drillship and the floating drilling platform that Shell will use and around a small fleet of support vessels. The safety zones will apply in Puget Sound, in transit to the Arctic drill sites and at the sites, as well as at a Barrow, Alaska, airport.

Another environmental advocacy group, the Natural Resources Defense Council, denounced the approval of the exploration plan as a “license to despoil our last pristine ocean and spew massive amounts of carbon pollution into our atmosphere.”

Sen. Lisa Murkowski (R-Alaska) welcomed the approval of the exploration plan but noted the regulatory hurdles still ahead.

“There is a total of seven permits that Shell must receive before it can resume drilling,” Murkowski said. “Continued collaboration by the responsible federal agencies to ensure those outstanding permits are not saddled with unworkable conditions will be critical.”

18 Conditions Listed 

Shell Gulf of Mexico Inc., the subsidiary that submitted the exploration plan, received a list of 18 conditions from BOEM, many of them simply requirements for all regulatory procedural steps to be completed before drilling can begin.

One condition was a restriction on drilling into an oil-bearing zone late in the drilling season, presumably to limit the risk of facing encroaching ice while attempting to complete or at least seal off an oil-bearing well.

BOEM said the extra restriction was “in consideration of the distance to limited support infrastructure on the Chukchi Sea coast, worst case discharge estimates, the capacity and location of staged oil spill response equipment, relief drilling rig proximity, the estimated time required to drill a relief well in the unlikely event of a late season well control incident, and other considerations.”

Shell had no well control incidents during its short 2012 drilling season, but it did have problems that year, most notably after the drilling season ended. The company was towing the drillship Kulluk back toward Seattle when a towing line broke and the Kulluk ran aground just off an island on the southern side of Alaska.

The Kulluk is not being used this year. Shell will use the floating drilling platform Polar Pioneer and the drillship Noble Discoverer. Two vessels are required to back each other up in the event of serious problems.

To contact the reporter on this story: Alan Kovski in Washington at akovski@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com