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Another glitch for Chukchi Sea offshore exploration

Posted: Tuesday, March 15, 2011

Yet another glitch has surfaced in plans for oil and gas exploration in the Chukchi Sea, considered one of the most promising areas for major new U.S. oil discoveries.

The U.S. Bureau of Ocean and Energy Management said March 4 it will revise and reissue a supplemental environmental impact statement for the Chukchi Sea outer continental lease sale 193, a lease sale for the Chukchi Sea held in 2008, but which has been contested in court by environmental organizations and some Alaska Native groups.

The revision will include an analysis of a "very large" oil spill created by an offshore exploration well, larger than the assumed spill in the current SEIS.

"Our problem with this is that the Department of the Interior keeps moving the goal posts," said Curtis Smith, a spokesman for Shell Oil.

Shell is one of several companies interested in drilling on leases acquired in OCS sale 193. Shell itself paid the government more than $2 billion for the leases.

Until the government clears up the litigation on the EIS for the sale, the legality of the leases is in question.

The current EIS for sale 193 assumed a "large" oil spill, which is a spill of about 100,000 barrels. The "very large" spill would be one that is more than 150,000 barrels, but agency officials are still working out just what that number might be.

In a status report to a Washington, D.C., U.S. District Court BOEM said it will release the revised DEIS in late May and will provide another 45-day public review period, according to an agency spokesman.

Previously the agency released a draft SEIS in October 2010 and conducted a 45-day pubic review with hearings held in several Alaska communities. That document is now to be revised.

The agency will do another round of community meetings on the new draft SEIS in June and July, the BOEM spokesman said.

All this could push the possible date for the final EIS and a record of decision by the federal government to October.

More than 150,000 comments were received in the first draft EIS, with many requesting an analysis of a large spill from a blowout, the agency said in an announcement.

"After reviewing those comments, BOEM has determined that it is appropriate to update its spill risk assessment and provide a very large oil spill analysis," the agency said in the document filed with the court.

Lease sale 193 was held in 2006 and attracted more than $2 billion in bids from Shell, ConocoPhillips and other companies for leases in the Chukchi Sea. The federal court ordered further evaluation of the environmental risk assessment after hearings on the suit file by lease sale opponents.

A revised supplemental environmental impact statement issued in October was in response to that order.

Shell Oil spokesman Smith said his company has worked with many possible scenarios of an Arctic spill in developing Shell's spill containment and cleanup plan and the vessels that would be on hand to carry it out.

"We're obviously watching closely what the Department of Interior will propose as an offshore spill scenario, and our question will be whether it is realistic," Smith said.

Ken Boyd, a consultant and a former state oil and gas director, said that it's unlikely that a Gulf of Mexico-type blowout would occur in the Chukchi Sea because the region does not have very high-pressure reservoirs like the one that BP was drilling into in the Gulf last year.

"We actually know quite a lot about the Chukchi Sea reservoir pressures and conditions. There have been five exploration wells drilled there," Boyd said. "If the government develops these scenarios on a reasonable basis, I don't see how you get to large amounts of spilled oil (like happened in the Gulf). I'm sure it will be a point of discussion, however."

Smith said he hopes the government will not use a scenario like the Gulf of Mexico offshore well blowout, he said.

"If the scenario is unrealistic, where do we go from there? How does Shell prepare for the Arctic?" he said.

Another problem is a plan for the revised environmental impact statement to be finalized in October could wind up being later if there are further delays. The schedule could get pushed into the year-end holiday period, or into early 2012.

"That could put any hopes for drilling in 2012 in the Chukchi Sea in jeopardy," Smith said.

Tim Bradner can be reached at tim.bradner@alaskajournal.com.



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