Drilling Arctic oil: do Shell’s response plans hold water?

23 April 2012 (Last Updated April 23rd, 2012 18:30)

Shell aims to begin drilling operations in the Arctic by July 2012. With months to spare, Offshore Technology profiles the decision by the US to approve these plans and discovers why environmental groups are pledging to campaign against the project, even after rigs are mobilised in the icy waters.

Drilling Arctic oil: do Shell’s response plans hold water?

After five years of battling with US courts, Royal Dutch Shell is now one step closer to becoming the first company to drill for oil in the Arctic since the 1990s.

Earlier in 2012, the US Bureau of Safety and Environmental Enforcement (BSEE) announced it had approved the company's oil spill response plan, effectively granting permission for drilling in the Beaufort and Chukchi seas, north of Alaska.

Shell said its plan prepares for the worst-case discharge, nearly three times bigger than what was studied in its previous Beaufort Sea plan which was put forward before 2010's Deepwater Horizon spill in the Gulf of Mexico.

But, the legal fight isn't over yet - Shell still needs to obtain well-specific permits and develop a bowhead whale monitoring programme before it can begin exploratory works in the Arctic. Also, despite a more stringent spill response plan, environmental groups still claim that oil companies cannot viably clean up the black stuff in unforgiving, icy waters.

Some industry and political experts, however, believe that at a time when oil is quickly running out, the Arctic Ocean, with its 26.6 billion barrels of recoverable reserves, needs to be exploited.

Shell's plans for Arctic exploration: prepared for the worst

"Earlier in 2012, the US Bureau of Safety and Environmental Enforcement (BSEE) announced it had approved the company's oil spill response plan."

A fleet of vessels, including the Kulluk and Discover drilling rigs, designed to maintain their location in moving ice as well as support vessels used for ice management and anchor handling, are preparing to head to the Arctic Ocean where they are expected to begin operations on July 10.

Shell, which has spent nearly $4bn formulating exploration plans, is now ready to drill three wells in the Chukchi and two wells in the Beaufort seas. But, before the company could even get to this stage, it faced a major hurdle.

Following the disastrous Deepwater Horizon oil spill which flowed for three months in the Gulf of Mexico in 2010, Shell was required to substantially rewrite its previously-permitted Arctic spill response plans.

The new plans, approved for the Chukchi and Beaufort operations in February and March 2012 by the Department of Interior's BSEE, graph the route of the potential blowout of 16,000 barrels of oil a day over a 30-day period, as opposed to a three-day period in the previous plan, identifying equipment Shell would use for dispersant application and in-situ burning.

The idea is for an oil spill response (OSR) vessel and OSR barge to be assembled on site to provide immediate containment, recovery and storage following a spill. Meanwhile, an oil spill tanker will be staged onshore and ready to store large volumes of recovered oil, emulsion and free water within 24 hours of departure.

In its Exploration and Environment report, which maps out its plans for the Arctic, Shell said its "advanced, ice-capable vessels, equipment and crews are on an unprecedented 24/7 standby and can begin recovery within one hour of any incident, large or small."

The company claimed that an accidental oil spill during its drilling operation is "extremely unlikely" in the shallower depths and lower pressures of the Arctic and said it is prepared for the worst-case scenario, adding that ice management vessels will only be needed in "exceptional cases" to steer large flows away from the drill ships.

But, opponents to the project are not convinced. They fear a spill in the area would be uncontrollable, particularly towards the end of the operations season in October, when the Arctic Ocean is prone to powerful storms, pervasive sea ice and frigid temperatures.

Environmental concerns: risks of Arctic oil drilling

It may appear that environmental groups are losing their battle to stop Shell from drilling for oil in the Arctic. The company has received the last air permit from the Environmental Protection Appeals board for its Kulluk drilling unit, while a federal judge in Alaska has filed an injunction against Greenpeace US, which prohibits protests within a certain distance of Shell's vessels.

"So, drilling in the Arctic, which is expected to hold 13% of the world's undiscovered oil according to the US Geological Survey, could ease these concerns significantly."

Several approvals are still needed before drilling can commence, however, including letters of authorisation from the US Fish and Wildlife Service and individual federal permits for each of the wells it proposes to drill. Also, it seems green activists, including Greenpeace, have pledged to continue to oppose Arctic drilling in 2012 and in the future.

On hearing the news of BSEE's approval, Cindy Shogan, Alaska Wilderness League executive director, said that as long as the Obama administration allows Shell to push forward with its plans to drill in the Arctic's Chukchi and Beaufort seas, the closer America's Arctic comes to a disaster which could "eclipse the tragedy in the Gulf."

"What the people of America's Arctic know is that cleaning up an oil spill in the Arctic with current technology is 'Mission Impossible,' and even the Obama administration concedes the job would be extremely difficult, Shogan said.

"What's more, the Arctic has almost no infrastructure - no roads or deep water ports and only a few small airports - and the nearest Coast Guard station is 1,000 miles away."

Michael LeVine, Pacific Senior Counsel of Oceana, an Alaskan-based conservation group, agreed and added: "The last in-the-water test of response equipment in the Arctic took place in 2000. A Joint Agency Report evaluating those tests and making recommendations was signed by the Alaska Departments of Environmental Conservation and Natural Resources, Department of the Interior's Minerals Management Service, the US Coast Guard and the North Slope Borough.

"That report concludes unequivocally that skimmers and booms - which are still important components of response plans a decade later - do not work.

"Good science should be at the heart of planning for the Arctic region. Without baseline information, it is impossible to understand the potential effects of proposed activities, effectively target response capacity, or ensure that important resources are appropriately safeguarded," said LeVine.

The Government Accountability Office (GAO), an investigative arm of the US Congress, is also concerned about whether a spill could ever be managed in icy conditions.

In a report issued on March 30, the agency cited Interior Department and Coast Guard Officials who said that if a blowout occurred after the drilling season, sea ice could make it difficult for icebreakers to get to the site of the accident.

Writing in his blog for the Huffington Post, David Yarnold, president of the National Audubon Society, agreed with the report and bluntly added: "Cleaning up a major spill in the Arctic would make the BP disaster look like child's play."

Vast potential of Arctic energy: breaking the ice

"Shell, which has spent nearly $4bn formulating exploration plans, is now ready to drill three wells in the Chukchi and two wells in the Beaufort seas."

The question whether to drill for oil in the Arctic has been a subject of ongoing political controversy for decades and, so far, plans have been upheld by insufficient technologies and major environmental concerns.

As time has gone on, however, world leaders are beginning to panic over the growing demand for oil reserves and are desperately looking for new supplies.

So, drilling in the Arctic, which is expected to hold 13% of the world's undiscovered oil according to the US Geological Survey, could ease these concerns significantly.

Upon approving shells plans to explore the Chukchi Sea in February, US Interior Secretary Ken Salazar insisted that Alaska's energy resources - onshore and offshore - hold "great promise and economic opportunity" for the people of Alaska and across the nation.

"In the Arctic frontier, cautious exploration - under the strongest oversight, safety requirements and emergency response plans ever established - can help us expand our understanding of the area and its resources, and support our goal of continuing to increase safe and responsible domestic oil and gas production," added Salazar.
Alaskan officials have also welcomed approval of offshore drilling, but Yarnold said that the state doesn't need to take such "risks" to meet the nation's energy needs.

"Oil imports are down. Oil production from domestic wells is up thanks to new technology. We're driving farther on a gallon of gas and using less. Energy independence is becoming a real possibility," Yarnold concluded.