Shell gets ready to drill: moving forward for return to Chukchi Sea.

AuthorBradner, Mike
PositionSPECIAL SECTION: Oil & Gas - Royal Dutch Shell PLC

Shell has its hopes up, once again, to make good on the company's $6 billion bet on Arctic offshore oil. The major regulatory approvals seem to be falling in place. At the end of March the US Bureau of Ocean Energy Management (BOEM) issued a Record of Decision closing a loophole on a legal dispute on the 2008 Chukchi Sea lease sale, the one where Shell paid over $2 billion for federal Outer Continental Shelf leases.

That action freed the agency to begin processing Shell's applications for drilling permits for the 2015 Arctic summer open-water season. Encouraged, the company began mobilizing vessels for its summer drill fleet including bringing the Polar Pioneer, a semi-submersible drill rig, from Southeast Asia to the Seattle area.

Shell's plan is to use two drill ships this summer in the Chukchi Sea, the Polar Pioneer and the drillship Noble Discoverer, which was used in 2012 drilling in the Arctic and has since been refitted to resolve problems that arose that year.

Plan Revisions

Meanwhile, Shell has submitted a revised exploration plan that would replace one submitted earlier. BOEM will not release details of the plan until it is reviewed, however. Meanwhile, the federal courts had given the agency authority to review the previous plan informally.

Shell is hoping for "conditional approval" of its plan by the end of April, but BOEM would still need to do an environmental analysis of the plan, which may spark more protests from environmental groups.

Meanwhile, the US Bureau of Safety and Environmental Enforcement, a sister agency to BOEM within the Department of the Interior, is still working on finalizing new special drilling rules for the Arctic, but Shell need not wait until these are issued, Bureau of Safety and Environmental Enforcement officials have said.

Most provisions in the new rules have already been agreed to by Shell and would be incorporated into permits.

Shell has been stymied for years in its efforts to explore its leases in the Alaska Chukchi Sea as well the Beaufort Sea. There are now hopes the stars have finally aligned.

The company was able to partly drill two exploration wells in 2012, one in the Beaufort Sea and one in the Chukchi Sea. The wells were "top holes," or the upper parts of the wells that stopped short of penetrating potential oil-bearing reservoir rock.

Drilling stopped at a certain level above where the oil was thought to be because Shell was unable to complete and gain federal approvals for a special...

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