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Environmental groups comment on Shell’s Mississippi Canyon plan

OCEANA – ENVIRONMENT AMERICA

April 10, 2011

By E-Filing

Bureau of Ocean Energy Management, Regulation, and Enforcement 381 Elden Street Herndon, VA 20170

Re: Shell Gulf of Mexico Inc Supplemental Exploration Plan (Ref. S-07444) for Mississippi Canyon Blocks 348, 391, and 392 (OCS-G 19939, 26252, and 26253, respectively)

To Sirs:

Oceana and Environment America hereby submit the following comments on Shell Gulf of Mexico Inc’s (“Shell”) proposed Supplemental Exploration Plan for Mississippi Canyon Blocks 348, 391, and 392 (OCS-G 19939, 26252, and 26253, respectively; Supplemental EP S- 07444). Shell’s Supplemental Exploration Plan (“EP”) fails to adequately comply with requirements in the Outer Continental Shelf Lands Act (“OCSLA”), its implementing regulations at 30 C.F.R. Part 250 or BOEMRE’s National Notice to Lessees and Operators of Federal Oil and Gas Leases, NTL No. 2010-N06. As a result of these shortcomings, Shell’s Supplemental EP does not safeguard against a disaster like that of the Deepwater Horizon last year, jeopardizing the economies and ecosystems of the Gulf of Mexico. Shell must therefore provide further information in order to fully satisfy NTL No. 2010-N06 and OCSLA regulations. If Shell fails to do so, BOEMRE must not approve its Supplemental EP.

1. Shell’s Discussion of Drilling a Relief Well Does Not Consider Failed Attempts and the Impacts Incurred Prior to Completion

Shell’s Supplemental EP does not accurately estimate the amount of time it would take to drill a relief well in the event of a blowout. Pursuant to NTL No. 2010-N06, applicants must submit information specifying “as accurately as possible the time it would take to contract for a rig, move it onsite, and drill a relief well” (page 2). Shell’s Supplemental EP fails to do so, and should thus be rejected until such information is submitted.

Shell Disregards the Potential Need to Drill Multiple Relief Wells

Shell fails to take into consideration the possibility of needing to drill multiple relief wells. While the Macondo well was successfully killed by BP with the first relief well, other blowouts have required the drilling of multiple relief wells. For example, in the case of the Montara blowout off the coast of Australia, the first relief well missed its target, as did the second, third, and fourth. Only on the fifth attempt – nearly a month after the first – was the runaway well successfully intercepted and killed. Furthermore, the Montara blowout operated in only 250 feet of water,1 where conditions are more hospitable than in deepwater environs.

1 Bradsher, Keith. “Relief Well Was Used to Halt Australian Spill.” NYTimes. 2 May 2010. 1

Therefore, the probability of missing the target with the first relief well is if anything greater in the case of deepwater drilling, the experience of BP notwithstanding. Even so, Shell does not budget for drilling multiple relief wells in its timetable, making its estimate of days from blowout to kill via relief well unrealistically low. Per NTL No. 2010-N06, Shell must provide a more accurate timetable or BOEMRE must reject its Supplemental EP.

Shell’s Budgeted Time for Drilling a Relief Well Is Unacceptably Long

While serious doubt surrounds the validity of Shell’s estimated timetable for killing a runaway well via a relief well, a greater miscalculation demands correction: the span of time between well blowout and kill via relief well is too long. As aptly demonstrated by the Macondo well blowout, oil spills have disastrous consequences on economies and ecosystems. Paid claims by the Gulf Coast Claims Fund alone have approached $4 billion2 and hundreds of dead marine mammals, sea turtles, and birds already have been found.3 Blocking the flow of oil from a runaway well as soon as possible would alleviate such economic and environmental impacts; a delay of 128 days, or even Shell’s underestimate of 128 days, would cause severe damages. As set forth in 30 C.F.R. §250.106, the Director is obligated to “prevent damage to or waste of any natural resource, property, or the environment.” An unnecessary delay in killing a runaway well via a relief well and the consequent environmental and economic damages violates this mandate; Shell’s Supplemental EP must therefore be rejected.

To shorten the delay between well blowout and kill via relief well, one of the following measures should be mandated. First, Shell could be forced to drill a relief well concurrent with any exploratory wells. Other nations, including Canada4, have adopted such a practice, while various domestic politicians and leaders, including Admiral Thad Allen5, have advocated for such a policy. Having a relief well already mostly drilled would allow for much quicker response to and cementing of runaway wells. Alternatively, Shell could deploy a deepwater drilling rig in the Gulf that only drills relief wells. In its Supplemental EP, Shell states two drilling rigs could drill a relief well in the event of a blowout, yet both rigs are themselves engaged in exploration and production. As a result, nearly 17 days would be wasted in mobilization and transit – 17 days of uninhibited flow of crude oil into waters of the Gulf of Mexico. Having a drilling rig tasked solely to relief well drilling would drastically reduce this time, allowing for faster completion of a relief well and ultimately alleviating economic and environmental damages. Without the implementation of one of these two measures, Shell’s relief well drilling capabilities are insufficient, and its Supplemental EP should therefore be rejected per 30 C.F.R. §250.106(c).

2. Shell’s Worst Case Discharge (“WCD”) Estimate is Flawed

Shell does not accurately estimate its Worst Case Discharge (“WCD”) due to false assumptions, which Shell is required to submit per NTL No. 2010-N06 (page 2). Shell’s WCD is based in part upon its incorrect estimate of days for the time required to kill a runaway well

2 “Overall Program Statistics.” Gulf Coast Claims Facility. Last updated April 7, 2011. 3 “Sea Turtles, Dolphins, and Whales and the Gulf of Mexico Oil Spill.” NOAA Office of Protected Resources. Lastcmodified February 15, 2011. http://www.nmfs.noaa.gov/pr/health/oilspill/. 4 Overby, Peter. “BP Sought to Ease Canada’s Policy on Relief Wells.” NPR. 3 June 2010.

http://www.npr.org/templates/story/story.php?storyId=127381814. 5 Stein, Sam. “Thad Allen Advocates Pre-Emptive Relief Well Drilling to Mitigate Future Disasters.” The

Huffington Post. 7 June 2010. http://www.huffingtonpost.com/2010/06/07/thad-allen-advocates- pre_n_602959.html.

via relief wells.

Because Shell estimates the WCD by multiplying the maximum possible daily discharge from a runaway well with the time required to kill the well with another relief well, its WCD is also . Consequently, the WCD put forth in Shell’s Supplemental EP is flawed and ultimately invalid. For this reason, unless Shell submits a rectified WCD, BOEMRE must reject its Supplemental EP.

3. Shell’s Ability to Prevent or Reduce the Likelihood of a Blowout is Inadequate

Shell details its blowout prevention and likelihood reduction techniques in its Supplemental EP, which include adherence to internal corporate standards, risk management, well design workflow, quality assurance, and remote monitoring. 6 While we applaud some of the measures taken by Shell, Shell’s ability to prevent blowouts is ultimately undercut by the demonstrated systemic faults in blowout preventers (“BOPs”), the last line of defense from loss of well control. BOEMRE’s NTL No. 2010-N06 states applicants must “[d]escribe the measures you [the applicant] propose that would enhance your ability to prevent a blowout, to reduce the likelihood of a blowout, […]” (page 3). Shell fails to satisfy these criteria by neglecting to address design flaws in its BOP, the last line of defense in blowout prevention. Therefore, BOEMRE must reject Shell’s Supplemental EP until the requisite research, investigations, and modifications have been performed to assure that Shell’s BOP functions as intended.

Following the Deepwater Horizon disaster, the Department of the Interior commissioned Det Norske Veritas (“DNV”) to conduct a forensic examination of the Deepwater Horizon’s BOP (Report No. EP030842), which failed in preventing a blowout. DNV found that the BOP failed to seal the well because the blind shear rams (“BSRs”) failed to fully close. The failure of the BSRs, in turn, was attributed by DNV in part to the drill pipe elastically buckling within the wellbore “due to forces induced on the drill pipe during loss of well control” (page 5). In other words, as stated by DNV, “[t]he elastic buckling of the drill pipe was a direct factor that prevented the BSRs from closing and sealing the well” (page 6).

The disturbing conclusions of DNV show that all BOPs, not just the Deepwater Horizon’s, are flawed by design and therefore cannot be relied upon as a viable last line of defense in blowout prevention. Indeed, it is exactly the type of event BOPs are supposed to defend against – a high-pressure surge of oil and gas, or a blowout – that can render BOPs ineffective. While DNV only investigated the BOP used by Deepwater Horizon, it’s a standard design used widely in the deepwater drilling industry, and DNV concludes that the findings of its study should “be considered and addressed in the design of future Blowout Preventers and the need for modifying current Blowout Preventers” (page 177). Shell does not address the conclusions of DNV’s report in its Supplemental EP, nor does it discuss the results of any research or investigations it has performed per the recommendations of DNV. Rather, Shell focuses on risk management, increased monitoring, and other measures in its Supplemental EP as proof of its ability to prevent and reduce the likelihood of blowouts. However, as the Deepwater Horizon and Fukushima disasters, among many others, have proven over the last few years, it is never possible to fully protect against low-probability, high-risk events. As a result, backups and measures of last resort must be maintained and assured to be functioning correctly – a test BOPs woefully fail.

6 Supplemental EP, Section (2)(2j)(3)(i): “Measures proposed to enhance ability to prevent blowout and to reduce likelihood of a blowout”.

Because Shell has not performed the research and design modifications necessary to ensure its BOP can properly function in the event of a blowout, its ability to prevent and reduce the likelihood of a blowout is ultimately insufficient. Although risk management and extensive scrutiny of drilling operations can allay part of the risk of a blowout, it can never fully safeguard against such events; it is therefore imperative that backup measures, i.e. BOPs, function properly. Shell, as discussed above, has not proven that its BOP functions properly in light of the recent conclusion of DNV’s report commissioned by the Department of the Interior itself. Shell’s failure to do so directly violates requirements set forth in NTL No. 2010-N06, so its Supplemental EP should be rejected.

4. Shell’s Spill Response and Cleanup Capabilities are Inadequate

Shell’s Supplemental EP does not demonstrate a sufficient spill response and cleanup capability. Compounding this deficiency is Shell’s inability to effectively prevent or reduce the likelihood of a blowout (see above), which, if not rectified, would greatly increase the chances of a blowout and subsequent oil spill. Pursuant to 30 C.F.R. §250.202(e), applicants must demonstrate in their EP that the proposed activities do “not cause undue or serious harm or damage to the human, marine, or coastal environment.” Shell relies upon well containment and spill cleanup plans that do not prevent serious damage from being incurred. Thus, BOEMRE should reject Shell’s Supplemental EP until Shell demonstrates its ability to do so.

Shell’s Well Containment Plans Are Inadequate

Shell has contracted with the Marine Well Containment Company (“MWCC”) in order to obtain well-containment capabilities. However, Shell fails to specify how long it will take for the containment system to be put in place in the event of a blowout. MWCC itself has also provided no estimated deployment timeline, although MWCC’s competitor has: on April 6, 2011, HWCG estimated between 10 and 17 days would be needed to contain a spill from a well blowout.7 The validity of HWCG’s estimate has yet to be proven; BOEMRE has not independently confirmed this estimate, and HWCG’s financial stake in the matter gives the firm an incentive to underestimate the deployment time. Additionally, the assumptions and calculations upon which HWCG’s estimate is based have not been made public, so verifying its veracity is not possible. Despite these problems, the 10 to 17 day estimate is assumed to be true and representative of MWCC’s containment capabilities.

A delay of 10 to 17 days until a well containment cap can be deployed poses undue and serious risk of harm and damage to the human, marine, or coastal environments. Shell estimates the worst case daily discharge of oil from a well blowout to .8 Over the course of 10 to 17 days, therefore, between of oil would accumulate in Gulf of Mexico waters. Such a volume of oil would seriously harm local fisheries, coastal and marine habitats, and the economies that rely upon them, in addition to endangered marine mammals, sea turtles, and other wildlife. Therefore, pursuant to 30 C.F.R. §250.202(e), BOEMRE must reject Shell’s Supplemental EP.

7 Klimasinska, Katarzyna. “Helix Says 10-17 Days Would Be Needed to Contain a Spill.” Bloomberg. 6 April 2011. http://www.bloomberg.com/news/2011-04-06/helix-says-10-17-days-would-be-needed-to-contain-a-spill- 1-.html.

8 First 30-days average daily rate; Supplemental EP, Section (2)(2j)(3)(b).

Shell Fails to Demonstrate Effective Spill Cleanup and Response Capabilities

In its Supplemental EP, Shell describes a number of spill cleanup and response methods it would employ in the event of a blowout. These methods include chemical dispersants, burning, boom, and skimming.9 Alarmingly, these methods mirror those employed by British Petroleum in its attempt to respond to and cleanup the Deepwater Horizon oil spill – an attempt that fell far short of BP’s initially stated capabilities and ultimately failed to prevent serious damage to coastal and marine environments. Shell does not discuss how its spill cleanup and respond capabilities differ from those of BP or have been altered in light of the Deepwater Horizon spill. In fact, despite Director Bromwich’s claims that new offshore drilling activities “meet and satisfy enhanced safety requirements” and have “the capacity to handle subsea blowouts and spills”10, all indications suggest Shell would fail to effectively respond to and cleanup an oil spill much as BP did. Thus, if a blowout and spill were to occur (which Shell also fails to adequately safeguard against; see above), Shell would be unable to prevent serious harm or damage from being inflicted upon human, coastal, and marine environments. Thus, pursuant to 30 C.F.R. §250.202(e), BOEMRE must reject Shell’s Supplemental EP.

5. Shell’s Discussion of Environmental and Ecological Impacts from Drilling-Related Activities Fails to Account for Current Ecosystem Health

OCSLA regulations require that an EP assess and analyze the potential environmental impacts of a project in detail sufficient to assist MMS in complying with NEPA and other environmental laws, such as the ESA and MMPA (see 30 C.F.R. §250.227). Specifically, the regulations require environmental impact information be as detailed as necessary to assist with NEPA compliance (30 C.F.R. §250.227(a)(3)) and to describe the resources that could be affected by the proposed exploration activities, including but not limited to benthic communities, marine mammals, and sea turtles (30 C.F.R. §250.227(b)(3)). Shell’s Supplemental EP fails to adequately describe the resources that could be affected as a result of exploration-related activities by not accounting for or considering the potentially-severe impacts of the Deepwater Horizon spill, and should thus be rejected by BOEMRE.11

Relatively little work has been done in assessing the environmental and ecological impacts of the Deepwater Horizon oil spill.12 Great uncertainty still surrounds to what extent the Gulf marine and coastal ecosystems were disrupted by the spill. The extent to which ecosystems and wildlife populations have been affected is crucial in estimating the environmental impact any exploration activities will have, and so must be considered in any EP. For instance, otherwise non-lethal impacts from exploration activities, e.g. noise-induced stress, could have lethal impacts if organisms are already highly stressed due to lack of food. Furthermore, whereas occasional mortality events due to collisions, seismic testing, and other activities may not be prohibitive to the long-term viability of a large population, this is not the case for small populations. If the Deepwater Horizon spill drastically reduced populations of already-

12 Schrope, Mark. “Gulf Research Cash Still in Limbo.” Nature. 15 February 2011. 5

9 Supplemental EP, Section (9b): Oil Spill Response Discussion.

10 “BOEMRE Approves Operations for Eighth Deepwater Well.” BOEMRE.gov. 1 April 2011.

http://www.boemre.gov/ooc/press/2011/press0401.htm.

11 See Supplemental EP, Attachment 18: Environmental Impact Analysis, Section C.3: “Threatened, Endangered, and Protected Species and Critical Habitat.”

endangered species, then even occasional mortality events could have significant detrimental effects on the long-term viability of populations.

Preliminary investigation into the health of the Gulf ecosystem has yielded several alarming results. A layer of dead animals and oil, as much as 10 cm thick in some places, coating the Gulf seafloor has been found to exist as recently as February 2011.13 The loss of these animals, as well as members of the benthic community undoubtedly affected by the layer of debris, could undercut food chains in the Gulf, endangering fisheries, marine mammals, and other organisms. In fact, a spike in the deaths of bottlenose dolphins has been documented along the Gulf Coast in recent weeks14, some of which were coated in oil scientists have linked to the Deepwater Horizon spill.15 While it is still unclear whether all of these deaths were caused by the Deepwater Horizon spill, the potential implications are enormous, for similar deaths could be occurring in other marine mammal populations as well, making them less healthy than currently thought. A recently published study underscores this point, estimating that, based on historical carcass-detection rates and population sizes, the true marine mammal death toll from the Deepwater Horizon spill could be 50 times the number of carcasses recovered.16 As of February 15, 2011, 115 marine mammal mortalities have been reported.17 Thus, the true number of marine mammal deaths could be as many as 5,000 – significantly greater than current estimates. If true, populations of endangered species may be much more threatened than is currently thought, meaning occasional mortality events and non-lethal impacts could harm the viability of future populations.

In sum, Shell fails to account for any significant changes in ecosystem and population health as a result of the Deepwater Horizon oil spill. Consequently, Shell fails to sufficiently describe the resources that could be affected by exploration-related activities, and furthermore does not provide information sufficiently detailed to assist in the NEPA process. Given this violation of 30 C.F.R. §250.227(a)(3), BOEMRE must reject Shell’s Supplemental EP until such information is gathered and presented.

*****

13 Palmer, Jason. “Gulf spill’s effects.” BBC News. 20 February 2011. http://www.bbc.co.uk/news/science- environment-12520630.

14 Shogren, Elizabeth. “Gulf Spill Investigated as Cause of Dolphin Deaths.” NPR. 25 February 2011. http://www.npr.org/2011/02/25/134053912/gulf-spill-investigated-as-cause-of-dolphin-deaths.

15 Coleman, Leigh. “Scientists Link Oil on Dolphins to BP Spill.” Reuters. 7 April 2011. http://www.reuters.com/article/2011/04/07/us-oilspill-dolphins- idUSTRE7367OP20110407?feedType=RSS&feedName=domesticNews.

16 Williams, Rob, et al. 2011. Understanding the Damage: Interpreting Cetacean Carcass Recoveries in the Context of the Deepwater Horizon/BP Incident. Conservation Letters 0: 1-6.

17 “Sea Turtles, Dolphins, and Whales and the Gulf of Mexico Oil Spill.” NOAA Office of Protected Resources. Last modified February 15, 2011. http://www.nmfs.noaa.gov/pr/health/oilspill/.

Note: marine mammal mortality estimates are preliminary and autopsies to definitively link mortality events to the oil spill are ongoing.

For the reasons above, Shell’s Supplemental EP fails to fully comply with requirements set forth in the OCSLA, its implementing regulations and NTL No. 2010-N06. As such, Oceana and Environment America urge BOEMRE to not approve Shell’s Supplemental EP until Shell provides the requisite information.

Sincerely,

Jacqueline Savitz Senior Scientist, Senior Campaign Director Oceana

Michael Gravitz Oceans Advocate Environment America

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