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Oil work to go on in Alaska’s Arctic waters, without drilling

ANCHORAGE, Alaska, June 28 | Fri Jun 28, 2013 2:23pm EDT

(Reuters) – No one will drill in Arctic waters off Alaska this year, but there is still plenty of offshore work for the oil industry to do when conditions finally allow it next month.

Royal Dutch Shell Plc, which canceled its 2013 Arctic offshore drill season after numerous troubles there last year, plans to send ships to study sites around oil prospects in the Chukchi and Beaufort seas, according to permit applications.

The company plans to do specialized surveys in the Chukchi, investigating shallow water hazards and other features around its prospects, said Curtis Smith, Shell’s Alaska spokesman. “This work continues to increase our understanding of the sub-surface and ocean bottom near our leases,” he said via email.

The Chukchi survey will involve one or two ships, according to Shell’s permit application, a far cry from the armada amassed last year for preliminary drilling. Shell also plans scientific and ecological baseline surveys in both seas, collecting data in preparation for more aggressive exploration activities.

Smith said no decision had been made about drilling in 2014.

Two other firms plan to conduct seismic surveys off Alaska’s coast. The most extensive program will be by SAExploration , which will have eight vessels survey the Beaufort, according to its application for permits submitted to federal agencies.

Another, TGS-NOPEC Geophysical Company, plans to use two vessels to conduct surveys in U.S. and international waters of the Chukchi Sea, according to its permit application.

Shell, SAExploration and TGS-NOPEC plan to start work as early as mid-July and continue as late as October, according to their applications. Permits are pending but have not yet been issued, according to the Bureau of Ocean Energy Management.

These plans are a shadow of what was contemplated a year ago, when Shell expected to complete multiple exploration wells off Alaska and ConocoPhillips was preparing for a 2014 drill season at its Devils Paw prospect in the southern Chukchi.

But after the grounding of a Shell drillship in the Gulf of Alaska, citations for safety and environmental breaches on its second rig, and equipment failures, Shell had to limit last year’s drilling to incomplete “top holes” at two sites. Future drilling is shelved until repairs are completed on both rigs at shipyards in Asia and other equipment is reviewed and augmented.

Conoco has also postponed its drilling plans indefinitely.

For the U.S. government, which is promoting increased energy production as part of a new National Arctic Strategy, fallout from 2012 is just a setback.

“I think it is safe to say we were disappointed in Shell’s performance last year,” Tommy Beaudreau, director of the U.S. Bureau of Ocean Energy Management, said at a meeting in Anchorage this month.

But Beaudreau added that he is still bullish on energy exploration in the waters off northern Alaska, and the relative lull in activity this year should not be seen as a harbinger of future events, given ongoing interest from the industry.

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