Sakhalin: the last 130 Western Gray Whales

From pages 48 & 49 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 Sakhalin-2 project

According to its developers, the Sakhalin-2 project is the world’s largest integrated oil and gas project. The capital expenditure for this project amounted to USD 21.3 billion from 2001 through 2009, while total costs exceeded USD 24 billion.

The project is about extracting gas and oil offshore Sakhalin Island, in the Russian Far East. The fields are called Lunskoye (mostly gas) and Piltun-Astokhskoye (mostly oil). The company Sakhalin Energy Investment Company Ltd. (Sakhalin Energy) is the operator of the project. Royal Dutch Shell is a partner and lead technical adviser to the operator. Under the shareholding structure of Sakhalin Energy, Gazprom holds 50% (plus one share), Shell 27.5% (minus one share), Mitsui 12.5% and Mitsubishi 10%.

The field development of the Sakhalin-2 project involved:

? two offshore platforms (Lunskoye-A and Piltun-Astokhskoye-B);

? an 800 kilometres onshore pipeline system to the south of the island; ? offshore pipelines systems;

? an onshore processing facility;

? a liquefied natural gas (LNG) plant;

? offloading terminals for crude oil and LNG.

At the end of 2010 the liquefied natural gas (LNG) plant of Sakhalin Energy reached its full production capacity of 9.6 million tonnes a year. Sakhalin Energy now has a 5% share in the world’s LNG market. The entire output is contracted under long-term arrangements (for 20 and more years). Around 65% of the Sakhalin LNG will be supplied to customers in Japan. The rest is intended for consumers in South Korea and North America. In 2009, Sakhalin Energy produced and offloaded over 5.5 million tonnes of oil and condensate. Oil produced from the Molikpaq and the PA-B is blended with gas condensate from the Lunskoye field. The blend of crude is used to produce petrol, kerosene, diesel fuel, and source materials for the petrochemicals industry. Molikpaq (Piltun-Astokhskoye-A) was the first offshore oil platform, installed in 1998 during phase 1 of the Sakhalin 2 project.

Case: the Western gray whale is on the brink of disappearing forever

The offshore gas and oil extraction by Sakhalin Energy interferes with the feeding grounds of the Western gray whale. Western gray whales feast throughout the summer and autumn in the waters off Sakhalin Island. The estimated population size in 2009 was about 130 whales, including only around 30 mature females. The population, which is listed as critically endangered on the IUCN Red List of Threatened SpeciesTM, could be driven to extinction by the mortality of just a small number of reproductive females.

In 2006 the International Union for Conservation of Nature (IUCN) created a panel of independent scientists – the Western Gray Whale Advisory Panel (WGWAP) – which provides scientific advice and recommendations on the operational plans and mitigation measures by Sakhalin Energy. On the first day of the 9th meeting of the WGWAP (4-6 December 2010, Geneva, Switzerland) Sakhalin Energy announced a plan to construct another offshore oil and gas platform.

The NGOs World Wildlife Fund (WWF), Pacific Environment, International Fund for Animal Welfare (IFAW) and Sakhalin Environment Watch strongly oppose the construction of a new platform and associated subsea pipeline. Subsequently, they also oppose the seismic survey in preparation for this platform, which is announced by Sakhalin Energy to take place during the summer of 2011.

The NGOs have urged the WGWAP to strongly recommend that Sakhalin Energy will not develop the extra platform. To underpin their statement, the NGOs have put forward several arguments:

? The acoustic pollution due to all platform-related activities near an area of high whale density might scare the whales away from their feeding grounds.

? There are increasing risks that a vessel might strike a whale.

? The risk of a Sakhalin-2 platform-related oil spill and/or additional subsea pipeline accident risk increases by 50%.

? The marine ecosystem may get polluted through drilling.

? The Western gray whales are likely already stressed from major seismic surveys which took place in 2010. Assessment of the full range of impacts (including impacts to feeding and reproduction) of the 2010 seismic surveys will not be possible until late 2011.

? It is essential to, at first, evaluate the cumulative impacts on the Western gray whales from the variety of different off shore oil and gas activities off Sakhalin Island.

? There is no good reason why the seismic survey needs to happen in 2011, as Sakhalin Energy has reiterated that a decision whether or not to go ahead with building the new platform would not be taken for several years.

? Sakhalin Energy has already put out a tender for the seismic survey and ruled out some design alternatives. The proposed route of the associated subsea pipeline(s) have not been disclosed even in the most cursory form. All this contradicts the repeated call for information on company activities to be presented to the WGWAP and observer organizations in a timely manner.

? The construction of a new platform fundamentally changes the full Sakhalin II project scope. Prior WGWAP recommendations (which are required by lenders) were based on an assumption that a total of two platforms would be built. The same is true of prior lender decisions, and Russian environmental regulatory decisions. Thus, Sakhalin Energy’s revelation brings into question whether the WGWAP should review the adequacy of prior recommendations.

THE COMPLETE 73 PAGE REPORT (with reference sources)

RELATED ARTICLE: 6 Oil Wells On Sakhalin Go Offline Moscow Times 14 October 2011

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