Shell launches formal bid to resume Arctic drilling

WASHINGTON _ Shell Oil Co. on Wednesday filed a broad drilling blueprint with federal regulators in Alaska, officially launching its bid to resume drilling in Arctic waters north of the state next summer.

The company is at least temporarily scaling back its ambitions, with a 2014 exploration plan that focuses solely on its potentially more lucrative leases in the Chukchi Sea. It also has acreage in the neighboring Beaufort Sea.

The plan filed with the Bureau of Ocean Energy Management envisions that Shell would use the contracted drillship Noble Discoverer to bore several wells in the Chukchi Sea coming years. Shell and the bureau confirmed
that the company filed a revised Chukchi Sea exploration plan with the agency’s Alaska office.

But there are still many steps before Shell’s drill bits could begin burrowing into the Arctic seabed again, following a 2012 season that was marked by high-profile mishaps, including the grounding of its conical drilling unit, the Kulluk, on Dec. 31 last year.

Related story: Shell announces return to Arctic in 2014 despite mishaps

Even Shell isn’t sure it will be drilling. In a statement Wednesday the company noted it had filed the exploration plan “to keep the company’s 2014 exploration options viable.”

“We will continue to take a methodical approach to this exploration phase and will only proceed if the program meets the conditions necessary to proceed safely and responsibly,” said Shell spokesman Curtis Smith.

Fundamentally, Shell will have to convince federal regulators it is up to the task, after the Interior Department in March issued a report questioning whether the company had the “ability to operate safely and responsibly in the challenging and unpredictable conditions” off the coast of Alaska.

Shell would have to win federal approval for its oil spill response plan and its drilling blueprint, which is subject to environmental reviews and public comment. Shell also would have to secure drilling permits for individual wells from the Bureau of Safety and Environmental Enforcement.

And regulators would have to go along with Shell’s likely plan to use a new vessel, Transocean’s semi-submersible drilling unit Polar Pioneer, as a backup rig ready to bore a relief well in case of an emergency. Shell officials aim to eventually put the 29-year-old Polar Pioneer to use in the neighboring Beaufort Sea and are on track to scrap its damaged Kulluk, taking a potential $200 million hit in the process.

One major step — securing air pollution permits to govern the work — is expected be much easier for Shell this year. Although the Environmental Protection Agency previously oversaw Clean Air permitting in the Arctic, Congress has shifted that responsibility to the Interior Department, over the objections of environmentalists who said that could weaken the process.

Pew: Federal standards needed for safe Arctic drilling

Exploratory drilling in U.S. Arctic waters is limited to just a few months when the area is relatively free of ice, giving oil companies a narrow window to work in the region.

During the 2012 season, Shell bored the first portion of its Burger A well in the Chukchi Sea, stopping about 1,300 feet down, before it penetrated any potential oil and gas reservoirs. The Interior Department barred Shell from penetrating potential hydrocarbon zones because its emergency oil containment system was not certified and nearby in time for the summer drilling season.

The company also completed a 20-foot-by-40-foot mud line cellar designed to hold critical emergency equipment just below the sea floor.

Interior Department officials are drafting a formal proposal of minimum standards for oil and gas activity in U.S. Arctic waters, partly with an eye on codifying some of the voluntary steps taken by Shell in 2012. A proposal is anticipated early next year.

Environmentalists who say offshore drilling poses extraordinary dangers to Arctic life, insist that at a minimum those baseline standards should be in place before any companies are allowed to drill.