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Royal Dutch Shell Drilling plans Alaska’s Arctic Ocean

A spill that occurs right before fall freeze-up (October or November) might not allow enough time to drill a relief well before sea ice conditions make it unsafe to continue drilling. Under such a scenario, the well could continue to blow out through the winter ice season until well control could be attempted after the spring thaw in May or June.

From pages 45, 46, & 47 of “Royal Dutch Shell and its sustainability troubles” – Background report to the Erratum of Shell’s Annual Report 2010

The report is made on behalf of Milieudefensie (Friends of the Earth Netherlands)
Author: Albert ten Kate: May 2011.

The Beaufort and Chukchi Seas on Alaska’s Arctic coast

The marine environments of America’s portion of the Arctic Ocean – the Chukchi and Beaufort Seas – are among the least understood in the world. This wide swath of ice-covered ocean waters – circulating between Canada and Russia – is home to one-fifth of the world’s polar bears, as well as seals, migratory birds, bowhead whales, several other types of whales, Pacific walrus and much more. The Inupiat people who live on Alaska’s North Slope call the Arctic Ocean “their garden.” The bowhead whale is the foundation for the Inupiat people’s subsistence culture.

Threatened and endangered species

In November 2010, almost 485,000 square kilometres along the north coast of Alaska were designated as “critical habitat” for the polar bear, as a result of a partial settlement in an ongoing lawsuit brought by the Center for Biological Diversity, the Natural Resources Defense Council (NRDC) and Greenpeace against the U.S. federal government. This designation under the Endangered Species Act is intended to safeguard the habitat that is vital to the polar bears’ survival and recovery. At the same time, the federal government is considering whether to allow oil companies, especially Shell, to drill for oil and gas in the polar bear’s newly designated critical habitat in the Chukchi and Beaufort seas off Alaska.

The polar bear is listed as a threatened species under the U.S. Endangered Species Act. The bowhead whales and several other types of whales occurring in the Chukchi and Beaufort seas are listed as endangered.

Shell wants to drill

In 2008, Shell paid USD 2.1 billion for 275 leasing blocks in the Chukchi sea. The company also has 137 leases in the Beaufort sea, acquired in 2005. If viable reservoirs are discovered through exploratory drilling, Shell would be the main company producing gas and oil in the shallow waters of Alaska’s Arctic coast. According to a YouTube-video on its plans, Shell wants to execute “a safe, sustainable drilling program that benefits Alaska and the nation with new jobs, new energy and new life for the TransAlaska pipeline.” Shell wants to start drilling exploration wells soon in both the Beaufort and Chukchi sea. After the first exploration activities it will take up to ten years before the production phase is started. It is estimated that production, mainly by Shell, in the Beaufort and Chukchi Outer Continental Shelf (OCS) could amount to almost 9 billion barrels of oil and 15 trillion cubic feet of gas through 2057.

Shell’s incomplete oil spill preparedness

In November 2010, the NGO Pew Environment Group published a technical report about oil spill prevention and response in the Beaufort and Chukchi seas. According to this report, darkness, extreme weather and shifting sea ice could delay efforts to stop an oil well blowout for six months or more, trapping spewed oil in ice for up to a decade. Shell’s spill response system was found to be inadequate. The Pew Environment Group concluded that “at present, offshore oil and gas drilling in the Arctic Ocean cannot be undertaken with any level of assurance that the marine environment can be protected from a spill or that industry can respond effectively.” Based on the report’s technical analysis, the Pew Environment Group documented several recommendations to reform the federal government’s approval and oversight of Arctic Ocean oil and gas activities.

Shell submitted an Oil Discharge Prevention and Contingency Plan (C-plan) for the Chukchi sea to the relevant federal agency MMS in May 2009. The MMS approved the C-plan in December 2009. The plan was considered sufficient to clean up a well blowout of 5,500 barrels per day over 30 days. Shell finalized its plan in March 2010.

The authors of the Pew report mention various arguments why Shell’s plan is inadequate:

? The uncontrolled well flow may be significantly higher than 5,500 barrels per day. Other North Slope wells have had production rates in excess of 10,000 barrels per day when first drilled.

? The two most recent well blowouts, the Montara platform blowout in the Timor Sea and the Deepwater Horizon blowout in the Gulf of Mexico, involved explosions and fires that damaged the drilling structure. Shell assumes that its Noble Discoverer drillship be undamaged by a well blowout, and could drill its own relief well if a subsea blowout should occur. This is highly unlikely.

? The Montara blowout took more than 70 days to control, in part because the first four attempts to drill a relief well were unsuccessful. Thus, drilling the relief well may take longer than 30 days.

? Shell assumes that it would contain or recover 90 percent of the oil offshore and another 5 percent nearshore. The much more moderate recovery estimates from the Deepwater Horizon spill (20 percent contained or recovered, 5 percent burned) make the 95 percent assumption highly unrealistic.

? Shell’s blowout scenarios fall short of the regulatory requirement to plan for a “worst case discharge under adverse weather conditions”. Under this requirement, adverse weather conditions means “weather conditions found in the operating area that make it difficult for response equipment and personnel to clean up or remove spilled oil or hazardous substances. These include, but are not limited to: fog, inhospitable water and air temperatures, wind, sea ice, current, and sea states.” In the offshore Chukchi Sea, the combination of wind, waves and dynamic sea ice can severely hamper or even preclude oil spill clean-up.

? A spill that occurs right before fall freeze-up (October or November) might not allow enough time to drill a relief well before sea ice conditions make it unsafe to continue drilling. Under such a scenario, the well could continue to blow out through the winter ice season until well control could be attempted after the spring thaw in May or June. Shell does include a response scenario nine days before freeze-up, but makes a number of assumptions and concludes that at some point, the ice will preclude further response and that it will track the oil until spring. This is not an adequate response. To the contrary of what Shell assumes, an oil spill occurring late in the drilling season could lead to oil trapped under multiyear ice, remaining in the marine environment for many years.

Government to re-assess spill risks

On 4 March 2011, the federal agency Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE, earlier MMS) determined that it would be appropriate to update its spill risk assessment, and include a very large oil spill analysis from an exploration well blowout in the Chukchi sea. BOEMRE has yet to define the volume of such a spill. The agency had received over 150,000 comments on a supplemental Environmental Impact Statement (EIS), which was opened for public comments during late 2010. Due to the Deepwater Horizon oil spill, many commenters requested an analysis that takes into account the possibility of a blowout during exploration. The Environmental assessment conducted by MMS on the Chukchi exploration plans had ignored the risks from a blowout, stating, “the probability of a large spill occurring during exploration is insignificant and, therefore, this [environmental assessment (EA)] does not analyze the impacts of large spills from exploration operations.”

BOEMRE anticipates that a final version of the supplemental EIS will be completed by October 2011, after a public comment period. Exploration plans for the Chukchi Sea may be submitted for the year 2012. The supplemental EIS was needed after Alaska Native and conservation groups had won a court case.

According to Leah Donahey, western Arctic and oceans program director for the Alaska Wilderness League, a plaintiff in the court case that is still pending, the initial environmental study lacked information in “hundreds of areas”. In a statement she said: “BOEMRE must take into account the fact that there is no known way to clean up a spill in the Arctic’s icy, extreme conditions.” Curtis Smith, a spokesman for Shell Oil, stated: “We already took into account worst-case discharge when we built a world-class Arctic oil spill response fleet for Alaska, so it’s hard to imagine raising the bar even higher than we already have in that arena.”

Shell’s incomplete air pollution permit

During the open water period from July to October 2011, Shell wanted to send its Noble Discoverer drillship to drill exploration wells in the Beaufort Sea. However, on 30 December 2010 the Environmental Appeals Board of the U.S. Environmental Protection Agency (EPA) ruled that Shell had not provided enough information on air pollution. The permits for both Beaufort and Chukchi were not in line with the U.S. Clean Air Act, and thus cancelled. The Noble Discoverer and its associated fleet of support ships, such as icebreakers and a supply ship, could not run out. Alaska native and conservation groups had challenged the permits. The Environmental Appeals Board received motions for modification and/or clarification from Shell and the regional EPA-office that had earlier issued the permits. On 10 February 2011, the Environmental Appeals Board rejected the requests from Shell. Among other, the permits would not be reinstated and new permits would have to be issued following applicable standards at the time of their issuance. Shell now hopes to get the necessary permits in time to drill in 2012. Brendan Cummings, senior attorney for the Center for Biological Diversity, one of the organisations that had challenged the permits, stated: “If Shell wants to be permitted fast, they need to submit a permit application that actually complies with the law.”

THE COMPLETE 73 PAGE REPORT (with reference sources)

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