RECENT HISTORY OF US OCS DRILLING AND A REVIEW OF PLANNED OPERATIONS August 12 and 13, 2014 Mark Fesmire, JD PE Regional Director Alaska Region Bureau of Safety and Environmental Enforcement
Active Prospects Barrow to Burger Prospect 140 miles Prudhoe Bay to Sivulliq 50 miles Barrow to Sivulliq Prospect 250 miles Prudhoe Bay to Burger 340 Miles Barrow to Anchorage 725 miles Prudhoe Bay to Anch. (855 road miles) 624 miles Barrow to Prudhoe Bay 200 miles
Operators Locations CP Shell CP Shell Shell
Actual Exploration Events 2012 Kulluk Beaufort Sea Discoverer Chukchi Sea
2012 LATE START Ice conditions in the Chukchi & Beaufort Seas, along with delays in preparing the drilling vessels postponed all activities until early September 2012.
Chukchi Sea
Chukchi Sea - 2012 Drilling operations for the Discoverer began and continued during the day of 9/9/2012 until ice was seen to be encroaching onto the drilling location. The Discoverer was detached from the anchors and moved to a safe location to wait on ice.
Chukchi Sea - 2012 The Discoverer returned to the drill site on September 22, 2012, and continued drilling. Operations continued through October 26, 2012 with the 20-inch casing set and cemented and the well temporarily abandoned per BSEE regulations.
Chukchi Sea - 2012 Discoverer in Dutch Harbor The Discoverer was under tow to Seattle when engine problems forced the tow to be stopped at Seward, AK. It was dry towed to an oversea repair yard for evaluation and repair.
Beaufort Sea
Beaufort Sea - 2012 The Kulluk arrived in the Beaufort Sea in September of 2012. Drilling operations were delayed while the Kaktovik Bowhead subsistence whale hunt was conducted. The hunt was concluded October 3, 2012, and permission was given to commence drilling operations.
Beaufort Sea - 2012 Kulluk - Beaufort Sea 2012 Operations continued till October 28, 2012, with the setting of the 30-inch casing and the well temporarily abandoned in accordance with BSEE regulations. 12
Beaufort Sea - 2012 Upon completion of drilling operations the Kulluk was returned to Dutch Harbor for demobilization. In December of 2012 Shell started moving the Kulluk to Seattle, WA for maintenance and upgrades. During tow operations the Kulluk broke away from the tow vessel and grounded near Kodiak Island on December 31, 2012. Kulluk Dutch Harbor 2012
Kulluk Under Tow
Kulluk Grounding December, 31, 2012
EVENTS 2013
Review of Shell s 2012 Alaska Offshore Oil & Gas Exploration Program A review of Shell s Exploration Program for 2012 was conducted by BOEM, BSEE, USCG, EPA, & NOAA with the resulting report submitted to the Secretary of Interior in March 8, 2013. 5 recommendations to industry conducting business in the Arctic were included.
Recommendations All phases of an offshore Arctic program must be integrated and subject to strong operator management and government oversight. Arctic offshore operations must be well-planned, fully ready and have clear objectives in advance of the drilling season. Operators must maintain strong, direct management and oversight of their contractors. Operators must understand and plan for the variability and challenges of Alaskan conditions. Respect for and coordination with local communities.
2013 Shell announced February 27, 2013, it would pause its exploration drilling activity for 2013 in the Beaufort and Chukchi Seas to ensure the readiness of all their equipment and people. On April 11, 2013, After the report on Shell s 2012 activities was issued, ConocoPhillips announced postponing drilling plans indefinitely because of regulatory uncertainties. In August 2013, Statoil delayed its planned exploration until at least 2015.
2013 November 12, 2013, ConocoPhillips, Alaska, requested Suspension of Operations (SOO) for their Sale 193, Chukchi Sea Leases. 20
EVENTS 2014
2014 January 21, 2014, the 9 th Circuit Court of Appeals ruled in favor of environmental and Alaska Native groups citing inadequate NEPA assessments that allowed the 2008 Chukchi Lease Sale. The case was sent back to the US District Judge in Alaska to determine what should happen next. January 30, 2014, Shell announced exploration drilling activities for 2014 are cancelled due to: The 9 th Circuit Court of Appeals ruling on January 21, 2014 Potential regulatory delays 22
2014 March 24, 2014, BSEE denied ConocoPhillips, Alaska s SOO request and on April 2, 2014, ConocoPhillips appealed that decision to the Interior Board of Land Appeals. The case is stayed to allow the parties to negotiate a settlement. 23
2014 March 28, 2014, BSEE directed a Suspension of Operations (SOO) for all Sale 193 Leases with an effective date of January 22, 2014, pending the outcome of the appeal attacking the sufficiency of the Sale 193 NEPA analysis. April 24, 2014, the United States District Court for the District of Alaska issued its: ORDER IN LIGHT OF REMAND that remanded the matter to BOEM for further analysis consistent with the Ninth Circuit s decision on appeal. 24
2014 July 10, 2014, Shell submitted a SOO request for its leases in both the Chukchi and Beaufort Seas. The request is under consideration. July 14, 2014, Statoil submitted a SOO request for its leases in the Chukchi Sea. The request is under consideration. 25
Development
Liberty (Beaufort Sea) Lease issued September 1996. Liberty field discovered in May 1997. Located about 5.5 miles offshore in about 20 feet of water & approximately 5-8 miles east of the existing Endicott Satellite Drilling Island (SDI). Will be developed on gravel island. 27
Liberty (Beaufort Sea) April 22, 2014, BP announced the sale of certain Alaska assets to Hilcorp. The transaction includes half of BP s interest in the Liberty Project, which is the only active drilling project in Federal waters. However, BP will continue to operate the project for the time being. 28
Production
Northstar (Beaufort Sea) 30
Northstar (Beaufort Sea) Joint Federal/State unit in Beaufort Sea ~12 miles NW of Prudhoe Bay. Gravel island located on State Lease. First production started 2001. 8 wells were drilled and are producing approximately 260,000 bbls. per month. The Federal portion of that is 17.84%. 31
Northstar - 2014 On April 22, 2014, BP Announced the sale of their interests in the Northstar Unit to Hilcorp Energy. Includes all current Federal OCS Production in the Arctic. 32
Development of Arctic Standards and Regulations BSEE and BOEM are jointly expediting the development of new Arctic standards and regulations: New regulations will go through the normal rulemaking process and are currently being reviewed by OMB. BSEE and BOEM will continue outreach to stakeholders. Rulemaking will allow adequate time for public comment Stakeholder meetings were held with industry, community leaders, and environmental interest groups. Proposed draft rules are scheduled to be published in the Federal Register in 2014. Proposed rules based on Shell prior proposals and 2013 report on the Kulluk incident.
Website: www.bsee.gov