Feds reviewing Shell’s 10 Arctic drilling permit proposals

Federal regulators are scrutinizing Shell’s plans to drill 10 wells in Arctic waters near Alaska ahead of planned testing of oil spill response equipment later this year.

The oil company has submitted 10 separate applications for permits to drill wells in the Chukchi and Beaufort seas to the Bureau of Safety and Environmental Enforcement, the agency’s director, James Watson, told reporters today at the Offshore Technology Conference.

Federal regulators at the Bureau of Ocean Energy Management have already approved Shell’s broad drilling blueprint for the two seas. And Watson’s safety bureau this year signed off on the company’s emergency plans for dealing with an oil spill in the Beaufort and Chukchi.

But Shell’s planned Arctic drilling program hinges on securing the individual well permits.

“We still don’t know if this drilling activity is going to occur,” Watson told reporters after a speech. “We won’t press our engineers to do anything in any kind of short-circuited fashion.”

Watson insisted the government’s review of Shell’s drilling plans won’t be “driven by any particular deadlines” and instead will turn on safety and regulatory compliance.

“This is something that is going to come, perhaps, right down to the wire, the way the schedule is going,” Watson said.

The window for drilling in the Arctic is relatively short, spanning summer months before ice starts encroaching.

Shell still has to convince regulators that it can contain oil and gas in case of a blown out well in the shallow Arctic waters. The company has developed a containment system like two others available for deep-water drilling in the Gulf of Mexico, but that hasn’t been tested in front of the government.

Watson said the equipment will be “put through its paces” while outside of water as soon as Shell is ready to conduct the testing.

Shell spokeswoman Kelly op de Weegh said the company plans to demonstrate its new cap and containment systems to BSEE in early June. “That’s on schedule with our planned timeline for this equipment,” op de Weegh added.

Eventually, the containment system will be stationed in the water — unlike devices in the Gulf that are parked on land. That’s true of other spill response equipment in the Arctic, Watson noted.

“Because there’s no shore support like there is in the Gulf, the entire response is already at sea,” Watson said. “It has a much shorter time frame, where there to be any kind of incident, between the time the alarm goes off and the time you would have equipment like the containment system or a skimmer or boom (deployed).”

Government investigators have warned that icy conditions, dark days and a lack of infrastructure could hinder efforts to clean up an oil spill in remote Arctic waters near Alaska. The Government Accountability Office said in March that those unique “environmental challenges” continue, despite Shell’s preparations for an emergency in the region.

“Even with Shell’s plans to have dedicated capping stack and well containment capabilities in the region to provide rapid response in the event of a blowout, these dedicated capabilities do not completely mitigate some of the environmental and logistical risks associated with the remoteness and environment of the region,” the GAO said.

Shell’s op de Weegh has stressed that the company believes its “plan, vessels and equipment are the Arctic standard.”