Royal Dutch Shell Group .com Rotating Header Image

As Shell moves toward Arctic, industry decries regulations

Screen Shot 2015-06-17 at 11.28.52Article by Jennifer A. Dlouhy published June 16, 2015 by The Houston Chronicle

As Shell moves toward Arctic, industry decries regulations

Industry leaders and allies in Congress say red tape will discourage Arctic exploration

WASHINGTON – Even as Shell Oil Co. gets closer to drilling new exploratory wells in Alaska’s Chukchi Sea, industry leaders and their congressional allies are insisting that the Obama administration’s planned Arctic drilling standards are so onerous and costly they will discourage others from following suit.

“Is the proposed rule intended to make exploration so expensive that it is not financially feasible to explore in our Arctic?” asked former Alaska state Sen. Drue Pearce, who headed the state Senate’s oil and gas committee. “If we want to have development in the Arctic as the president has called for, then we need to have standards that are economically feasible to allow them to go forward.”

Pearce testified Tuesday during a House Natural Resources subcommittee hearing on the proposed requirements. Meanwhile, federal regulators scrutinized Shell’s Arctic drilling permit applications, a company-contracted rig moved toward Alaska and the company’s emergency containment equipment was deployed in a test.

The flurry of activity and the $2.7 billion that oil companies paid the government for drilling leases in the Chukchi Sea in 2008 speak to the vast energy potential in the region, said U.S. Rep. Doug Lamborn, R-Colo.

But rules proposed by the Bureau of Safety and Environmental Enforcement, which oversees the offshore industry, are too prescriptive, threatening to lock in old technology and slow exploration in the region, Lamborn said.

In addition to Shell Oil Co. – the Houston-based North American unit of Royal Dutch Shell – Houston’s ConocoPhillips and Norway’s Statoil hold leases in the Chukchi Sea, but both have cited regulatory uncertainty in delaying drilling there.

The safety bureau wants to require companies to have critical emergency equipment near any Arctic oil drilling site, including a second rig capable of boring a relief well in case of a blowout like the one at BP’s Macondo well that sent crude gushing into the Gulf of Mexico in 2010. Companies also would have to stop drilling about a month before sea ice is expected to encroach on the region, allowing time for drilling a relief well to intercept the original well in an emergency.

But oil industry representatives argue that other technologies, including emergency containment domes and capping stacks, would be just as good at reining in a runaway well.

Bureau director Brian Salerno said he isn’t convinced. There is no documented evidence that these alternatives would work, he said, noting that Norway and Canada both require that companies have the capability to drill relief wells swiftly.

“We have not seen any technology that would deal with the situation,” Salerno told the subcommittee.

Rep. Alan Lowenthal, D-Calif., insisted the proposed Arctic standards aren’t strong enough.

“When you are dealing with an area as remote, fragile and irreplaceable as the Arctic, the question should be, are we taking every possible precaution?” he said. “Because mistakes will be made and the unexpected will happen, and if you are not prepared for every possibility, you risk destroying an entire ecosystem and an entire culture.”

Shell’s emergency Arctic containment system was getting a close look Tuesday, as officials with the Coast Guard and Bureau of Safety and Environmental Enforcement witnessed the deployment of a key component during an exercise near Everett, Wash.

The system, slated to be in the Chukchi Sea’s Kotzebue Sound during Shell’s planned drilling, includes a 20-foot-tall steel containment dome meant to fit over a damaged well and an array of valves called a capping stack to choke off flowing oil and gas.

The capping stack was deployed Tuesday from the barge Arctic Challenger, following a similar exercise with the containment dome in March. Although the safety bureau deemed that exercise successful, proving the dome can be deployed and operated as designed, the agency’s regional director for Alaska outlined some concerns in an April 16 letter to Shell.

Chief among them: The tugboat Corbin Foss, which was anchored near the Arctic Challenger, dragged anchor amid gale-force winds. According to the letter, released in response to a Freedom of Information request from conservation organization Greenpeace, two small work boats had to engage into the side of the Corbin Foss and push it back into position against wind and seas.

At the time, participants in the exercise had trouble establishing radio contact with the tugboat, the letter said, describing that problem as “an operational or technical deficiency which must be addressed.”

Salerno said the exercise was meant to ensure that crews know how to remove containment equipment from the deck of vessels carrying it and control it during deployment.

“There is a lot of value in exercising it through this process and making sure (it) is working – not only the stack itself but the handling of it,” Salerno added.

The safety bureau is also vetting two drilling permit applications for Shell’s Burger prospect in the Chukchi Sea. The bureau has just received additional details from Shell on one application and is waiting for more information on the second.

Salerno declined to give a time frame for a final decision on the permits, but said “there’s nothing to indicate any showstoppers at this point.”

SOURCE

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

Comments are closed.

%d bloggers like this: