Shell gets drilling go-ahead in Chukchi

More oil could come out of Alaska.

Royal Dutch Shell won permission on Monday to start deep drilling at a Chukchi Sea exploration well, opening the way for the company to reach oil.

The U.S. Bureau of Safety and Environmental Enforcement granted Shell a modified drilling permit that had previously allowed the company to drill only the top section of the well, one of six that Shell plans for its Chukchi Sea Burger prospect.

The modification was granted once a key Shell support vessel, the contracted Finnish icebreaker Fennica, arrived at the drilling site and was placed in position to respond to a possible emergency. The Fennica – which was damaged in an accident in Unalaska last month and sent to Portland for repairs before returning to Alaska — carries a capping stack that can be deployed within 24 hours on an out-of-control well, BSEE said.

Responsibilities fulfilled

With the Fennica on-site, Shell has now fulfilled its responsibilities for amassing safety equipment at its Burger J well and is cleared to begin drilling to “total depth,” into oil-bearing zones deep below the ocean surface, BSEE officials said.

“Activities conducted offshore Alaska are being held to the highest safety, environmental protection, and emergency response standards,” BSEE director Brian Salerno said in a statement. “Now that the required well control system is in place and can be deployed, Shell will be allowed to explore into oil-bearing zones for Burger J. We will continue to monitor their work around the clock to ensure the utmost safety and environmental stewardship.”

With full permission granted to penetrate into oil-bearing zones at that well, Shell is continuing the drilling work it started on July 30, said Shell spokeswoman Megan Baldino.

“The top hole is still in progress, and we continue to make progress on the well,” Baldino said.

Possibilities for season

Shell has also applied to BSEE for a modification that would allow it to drill into oil-bearing rock at a nearby well site called Burger V. For now, Shell has permission to do only top-hole drilling at Burger V, but drilling at both wells is possible this summer, Baldino said.

Still, there is no specific timeline for this year’s drilling, she said. The goal is to conduct a “safe, efficient operation,” she said.

“Whatever we don’t accomplish this year we could continue in 2016,” she said.

Companies must have BSEE permits for each specific well drilled in federal offshore territory.

Promising oil frontier

The oil industry and the Department of Interior have characterized the Arctic outer continental shelf as a highly promising oil frontier. The Bureau of Ocean Energy Management, the sister agency to BSEE, estimates that the U.S. portion of the Chukchi holds 15.4 billion barrels of recoverable oil and the U.S. portion of the Beaufort holds 8.2 billion barrels of recoverable oil.

But oil activity in federal waters off Arctic Alaska has been sporadic and sparse.

Prior to 2012, there had been only 30 exploration wells ever drilled in the U.S. Beaufort and only five in the Chukchi, according to BOEM records. There has never been any commercial oil production from the federally managed Alaska outer continental shelf, aside from a small portion of oil coming from a corner of the Hilcorp-operatedNorthstar unit, which is located mostly on state territory closer to shore.

Shell has sought to change that history.

Ambitions in Arctic

The company spent $2.1 billion on Chukchi Sea leases in a record-setting lease sale in 2008; it also bought leases in the Beaufort Sea in 2005 and 2007. In all, Shell says it has spent about $7 billion on its Alaska exploration program.

Shell began drilling on some of those leases in 2012, completing top portions of one well in the Chukchi and one in the Beaufort. That season was plagued with legal and logistical troubles and was capped by the grounding of a Shell drill ship, the Kulluk, which the company later deemed to be damaged too badly to be worth repairing.

Throughout the years, environmentalists and some Alaska Natives have opposed Shell’s Arctic oil ambitions. They cite threats of oil spills in the harsh but vulnerable Arctic environment, the dangers to Arctic animals already coping with a rapidly changing climate and the potential contributions of Shell’s operations to overall global climate change.

Environmentalists criticize latest development

On Monday, they criticized BSEE’s decision granting Shell permission to drill to oil-bearing zones at the Burger J well.

“Some ideas are just non-starters, like drilling for oil in the Arctic Ocean,” David Yarnold, president of Audubon, said in a statement. “Spills under ice sheets can’t be controlled, and America doesn’t need the oil in order to maintain its energy independence. This is just cynical partisan politics, a public relations bone that the Obama administration is throwing to Shell.

“It’s perplexing, and depressing quite frankly, to hear President Obama say he wants to fix climate change but then approve Arctic drilling. It’s like a doctor diagnosing a patient but then refusing to write a prescription,” said Rebecca Noblin, Alaska director of the Center for Biological Diversity.

The Associated Press contributed to this report. 

This story is posted on BarentsObserver as part of Eye on the Arctic, a collaborative partnership between public and private circumpolar media organizations.