Shell formally launches 2015 Arctic drilling bid

WASHINGTON — Shell’s campaign to resume Arctic drilling in 2015 took a major step forward Thursday, as the company gave federal regulators a broad drilling blueprint that lays out plans for boring new exploratory oil wells in the Chukchi Sea.

The exploration plan filed with the Bureau of Ocean Energy Management in Anchorage keeps the door open for Shell Oil Co. to resume its Arctic drilling campaign as soon as summer 2015. It is the strongest evidence yet that Shell’s new CEO, Ben van Beurden, is willing to keep pursuing a big discovery in the U.S. Arctic, after a mishap-plagued 2012 exploration campaign ended with the grounding of the company’s Kulluk drilling rig and a $200 million loss for scrapping it.

Spokesmen with the ocean energy bureau and Shell confirmed the filing Thursday.

Related story: Shell keeps Arctic drilling on table for 2015

But Shell still must clear major legal and regulatory hurdles before it can return to icy Arctic waters — and few of those obstacles are in the oil company’s control.

Chief among them: The ocean energy bureau’s ongoing work to redo an environmental analysis underpinning its 2008 auction of Chukchi Sea oil leases, after a federal court ruled in January that the government’s estimate about potential oil recovery from the waters was flawed. The agency’s rewrite of that environmental impact statement is on track to be issued next spring — about the same time Shell likely would be looking to move its drilling rigs and support vessels to the region in preparation.

While Shell pursues essential federal permits and regulatory approvals, the company has quietly been lining up new vessels to join its Arctic fleet, moving equipment to the region and forging new relationships with Alaska natives meant to bolster support for its offshore drilling.

Equipment and supplies were recently delivered to Shell’s worker camp, which is being resurrected in Barrow, Alaska. And the company is adding new anchor handlers and tugs to the roster of ships it will have in the Chukchi Sea next year, if drilling is approved.

Shell also has been working to convince regulators that it has made broad changes to better supervise its contractors, from drilling companies to boat operators. For months, the ocean energy bureau has been trading letters with Shell documenting dwindling concerns with the company’s Arctic plans.

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Shell spokesman Curtis Smith said the company’s new Arctic exploration plan reflects lessons learned from the 2012 operation.

“This program places more emphasis on integrated planning and additional marine protocols,” Smith said. “We’ve taken a critical look at all of the experiences we’ve had in Alaska over the last several years and this latest exploration plan takes those learnings into account.”

Shell’s newly submitted exploration plan — a revision of a previously approved blueprint first filed in 2011 — outlines ambitions to drill up to six wells over several years, with activities concentrated in the potentially more lucrative Chukchi Sea and not the neighboring Beaufort. The ocean energy bureau is tasked with vetting the broad exploration plan, but even with that agency’s approval, Shell would have to win drilling permits from the Interior Department’s Bureau of Safety and Environmental Enforcement before beginning work on individual wells.

The company is formally withdrawing a proposed exploration plan it filed last year.

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Shell is aiming to deploy two drilling rigs — the Noble Discoverer it used in 2012 and Transocean’s semi-submersible drilling unit Polar Pioneer. While both might be drilling simultaneously either could be tapped in an emergency to bore a relief well. Both rigs are now in Singapore for upgrades.

It also is promising to add an additional helicopter to its operations in the region, which will allow it to transport additional crew and support government required sampling programs.

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.

Although the previously drilled Burger A well is among Shell’s six potential targets, outlined in the newly filed exploration plan, the company might not turn to it right away.

Separately, federal regulators have drafted a host of minimum standards that would govern oil and gas activity in U.S. Arctic waters; the Office of Management and Budget is now reviewing the measure, which could be formally proposed later this year.

Read more: Administration studies Arctic requirements

It is not clear whether the government will impose those Arctic standards in time to govern any Chukchi Sea drilling next summer. But administration officials have signaled that the mandates closely track voluntary steps Shell employed in 2012, such as its decision to create an oil spill containment system that could trap flowing oil and gas from a blown-out well.

Environmentalists warn that drilling in Arctic waters is too risky and insist that any spill at the top of the globe would be impossible to clean up. While Shell plans to stash booms, skimmers and other spill response gear nearby, conservationists note that most of that equipment is geared toward warmer, calmer waters.

John Deans, the Arctic Campaign specialist for Greenpeace, called Shell’s preparations “a red flag for the millions of people around the world who want to save the Arctic from catastrophe.”

“Shell clearly hasn’t learned anything from its last Alaskan misadventure, which would have been funny had it not put lives, local communities, and a delicate ecosystem in grave peril,” Deans said. “Shell is putting the pieces in place for next summer so it will at least appear competent to the administration, but anyone who has been paying attention knows that Shell is simply hoping the public and the U.S. government will confuse their commitment for competency.”