BOEM approves Shell Arctic plan

May 11, 2015

The US Bureau of Ocean Energy Management (BOEM) granted conditional approval of Shell’s multi-year exploration plan for the Chukchi Sea today (11 May).

The approval comes after what the agency described as a “comprehensive review.” Last month, the US Department of the Interior announced it had begun reviewing Shell’s Arctic plans following a record of decision affirming Shell’s Arctic leases from the Chukchi Sea OCS oil and gas lease sale 193 from 2008. Shell has spent US$1 billion preparing for its return to the Arctic this summer, following a two-year hiatus.

Upon receiving the news, Shell called the news “an important milestone,” signaling regulator’s confidence in the company’s exploration plan.

BOEM granted its conditional approval based on Shell obtaining all necessary permits from other state and federal agencies, including permits to drill from the US Bureau of Safety and Environmental Enforcement (BSEE) and appropriate authorizations under the Marine Mammal Protection Act. Additionally, Shell is prevented from commencing drilling operations until all biological opinions under the Endangered Species Act have been issued. Shell is required to conduct all operations under the plan in compliance with the terms and conditions included in those opinions, BOEM said.

“We have taken a thoughtful approach to carefully considering potential exploration in the Chukchi Sea, recognizing the significant environmental, social and ecological resources in the region and establishing high standards for the protection of this critical ecosystem, our Arctic communities, and the subsistence needs and cultural traditions of Alaska Natives,” said BOEM Director Abigail Ross Hopper. “As we move forward, any offshore exploratory activities will continue to be subject to rigorous safety standards.”

Shell’s revised exploration plan proposes the drilling of up to six wells within the Burger Prospect, located in approximately 140ft of water about 70mi northwest of the village of Wainwright. Shell will conduct its operations using the drillship M/V Noble Discoverer and the semisubmersible drilling unit Transocean Polar Pioneer, with each vessel providing relief-well capability for the other. The two drilling units and their supporting vessels will depart the Chukchi Sea at the conclusion of each exploration drilling season.

Alaska’s US Senator, Lisa Murkowski, welcomed the news, stating that the approval, “marks another important step toward the US assuming a leadership role in the Arctic.” However, she advocated that more still needs to be done in order to achieve Arctic development.

“With an estimated 25% of the world’s undiscovered conventional oil and gas resources and active exploration by countries like Russia, it’s critical that we move forward as a nation and set the standard for responsible development in the Arctic,” Murkowski said in a public statement.

She continued, “Interior’s approval of the exploration permit is a key step, but more needs to be done in the coming weeks to ensure that Shell’s exploration program proceeds this summer. There is a total of seven permits that Shell must receive before it can resume drilling. Continued collaboration by the responsible federal agencies to ensure those outstanding permits are not saddled with unworkable conditions will be critical.”

National Ocean Industries Association President Randall Luthi also welcomed the news, saying: “BOEM’s decision to conditionally allow Shell to proceed with the carefully planned and coordinated drilling effort in Alaska is good news.  The potential for energy development in the Chukchi Sea would allow Alaskans to benefit from well-paying jobs and resources to safeguard the environment, protect native traditional activities, and improve communities.

“The Trans-Alaska Pipeline may also benefit from the flow of resulting production.  For the rest of the US and the world, successful oil and natural gas development in the area will help to meet the ever increasing demand for reliable, reasonably priced energy,” he said in a statement issued to OE.

The American Petroleum Institute also agreed that Arctic development could have economic benefits, saying: “The safe and responsible development of oil and natural gas in the Arctic is critical to our economy and national security. Failure to develop these resources would put America's global energy leadership at risk at a time when Russia and other Arctic nations are forging ahead.”

Thomas Lorenzen, former Assistant Chief, Environment & Natural Resources Division, Environmental Defense Section of the US Justice Department, similarly welcomed the news of Shell’s conditional approval, calling today’s news a “preliminary step,” but an important one. “It recognizes both the economic and energy potential of the Arctic seas, but also the environmental sensitivity of the area and the challenges of responding to spills and other incidents in such a harsh climate,” he said in a public statement.

Image: Shell

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