Evaluation of Exploration in the Arctic OCS

The BP oil spill in the Gulf of Mexico has affected and will continue to affect the environment and the lives of many in the southern coastal states for years to come. For Alaskans the spill brought back memories of Exxon Valdez oil spill in 1989 and the impact it had on their lives.

Today the BP oil spill has resulted in a more direct impact on Alaska and the future of oil and gas exploration in the State. Today President Obama announced the suspension of Shell’s offshore arctic exploration operation plans. There is substantial uncertainty regarding when and if the Administration will allow exploration in the Arctic OCS to continue.

The purpose of this article is to outline the issues that the Administration needs to address before they decide to allow or disallow exploration in the offshore Arctic.

In the weeks following the Exxon Valdez oil spill, as the exploration permitting director for a major oil company, I submitted my first offshore oil spill contingency plan. The issues we were required to address then are the same issues that should be addressed now as the Obama administration evaluates whether or not to make the suspension of offshore exploration drilling long term or permanent.

There are four areas that should be examined during the review: 1) formation pressures and risk, 2) safety and prevention, 3) spill plan preparedness, and 4) effectiveness of equipment and personnel.

First, formation pressures and the potential risk of blowout

The risk of encountering high pressure pockets of gas or oil should be understood and planned for in the drilling and well casing program. Several wells in the Arctic have lost well control due to encountering high pressure gas pockets that were not managed properly in the drilling program. Luckily none involved loss of well control in an oil producing zone. Even though there have been several loss of well control events, statistically the industry has done a good job understanding and preparing for this type of event.

Second, safety and prevention

In the event of the loss of well control, the operator should be able to utilize the safety mechanisms in place on the rig to stop the flow of oil or gas to the surface. The most well know mechanism, especially after the BP blowout, is the blowout preventer. Functioning properly, it should be able to seal off the well and allow the operator to develop a plan to regain control of the well without release of hydrocarbons into the environment. These safety mechanisms are tested regularly and almost always work. But there are now at least two well known events where they didn’t work: the IXTOC in Mexican waters, and now the BP blowout in the Gulf of Mexico OCS.

Third, spill plan preparedness

Shell has committed a substantial amount of equipment to meet the Alaska Department of Environmental Conservation’s Response Planning Standard and to meet the Minerals Management Service requirements. On paper Shell could handle a well blowout that discharged up to 5,500 barrels of oil into the environment for up to 34 days which is the number of days Shell projects it will take to drill a relief well and stop the blowout. On paper it looks like Shell has met the spill plan preparedness standard.

Fourth, effectiveness of equipment and personnel

The Oil Discharge Prevention and Contingency Plan (ODPCP) contains lists of equipment and nameplate capacities but very little analysis in the way of the effectiveness of that equipment in the environment the equipment will probably encounter.

Generally industry spill plans and presentations regarding preparedness make it look like they are prepared and could clean up oil in any environment they encountered in their operations. Pictures of spill response vessels and spill equipment in the Arctic environment give the audience the feeling that the equipment pictured will be onsite and ready to perform the function to the effectiveness that is listed on its nameplate.

The problem is that nameplate capabilities don’t work in the Arctic. Skimmers that performed poorly in the Gulf of Mexico will perform even worse in the Arctic, even if they are “winterized” for Arctic conditions. Sea ice conditions in the Arctic may prevent spill response vessels and equipment from getting close enough to the oil to deploy the equipment. Oil may be entrained in the ice and under the ice where spill response equipment will not be effective. Oil may not collect in sufficient quantities or may be weathered to such an extent that in situ burning is not an available option.

There is documentation of the amount of equipment available to respond to a spill and the potential response times, but there is little analysis of the effectiveness of that equipment in various arctic conditions. The State of Alaska and the MMS need to understand how much oil can be expected to be picked up under different scenarios and what the impact is on the environment from the remaining oil that is not recaptured.

How effective is the use of dispersants in broken ice conditions? What is the impact on wildlife in the water column and on the ice? Some of the dispersant will get on the ice. What if it is injested by wildlife? What would seem unusual for people is not always unusual or uncommon for animals. There is at least one incident on the north slope where a polar bear injested industrial liquids resulting in the death of the polar bear.

Exploration drilling activities are planned to begin on or about July 4th and drilling in hydrocarbon bearing zones would end on or before October 31st, depending on ice and weather. What if a blowout occurred late in the drilling season, or what if sea ice prevented the drillship from getting back on location? There may not be sufficient time to drill a relief well during that drilling season and the drillship may have to return the next summer drilling season to complete the relief well. If the existing drillship burns up in the ensuing fire, the relief rig will not be available to drill a relief well until the next drilling season. What is the impact on the environment from an uncontrolled well blowout that continues to release oil in the environment for 6 months or longer?

Shell’s exploration plan states that “A very large spill from a well-control incident is not a reasonably foreseeable event in connection with the OCS exploration activities set forth in Shell’s EP, and therefore, this EA does not analyze the impacts of such a worst-case scenario.” Lets hope they are right.

You don’t plan for meteors hitting the earth, but you do plan for earthquakes. The likelihood of a catastrophic oil spill in the arctic is somewhere in between the two.

If the state and federal government approve Shell moving forward in the Alaska OCS, they need to understand that a major oil spill from a blowout will not be easier to stop or clean up in the arctic than it was in the Gulf of Mexico. It will be more difficult. The best we can hope for is good management practices and the statistical likelihood that the incident will not occur.

The Red Pen Challenge Update

This morning I called and left messages regarding the Red Pen Challenge at the following gubernatorial campaigns:

Ethan Berkowitz
Hollis French
Sam Little
Sean Parnell
Bob Poe
Ralph Samuels
Bill Walker
Donald Wright

If you know of a candidate for governor that is not on this list that would like to be included in the challenge, please ask them to contact me, or if you are one of the above candidates and somehow did not receive my message, please contact me as well. For the sake of convenience I have reprinted the Red Pen Challenge below.

I call this proposal The Red Pen Challenge.

I propose that every candidate for governor should review the capital budget and identify those items they would veto and submit them to the people of Alaska at the same time the Governor submits his signed capital budget bill, with appropriate vetoes if any, to the people of Alaska.

Rules of the Challenge

1) The governor agrees, in advance, to the date and time he will make public his decision on the capital budget.

2) Each candidate will submit their proposed capital budget to the public on the same date prior to the governor’s submittal to the public.

3) Governors Rules apply. – Each candidate will be required to provide the public with a copy of the budget with the specific “vetoed” items lined out and initialed, just like the Governor is required to do.

4) All newspapers will be encouraged to post on their web pages all responses so the Alaska public can compare the “decisions” of each of the participating candidates and add this information to their overall evaluation of who they want to support for governor.

I believe the above proposal will provide the appropriate scrutiny that was not applied during the legislative process to each and every appropriation in the capital budget.

Since the capital budget has not been transmitted to the governor there is still plenty of time for each of the candidates to comply with the above challenge. They will have the same amount of time to review and analyze the capital budget as the governor has.

I am also certain that if a candidate needs more information about the value of a specific appropriation, the recipient of that appropriation will be glad to provide the candidate with as much information as the candidate needs to make their decision.

I will be contacting each candidate and the governor over the next week to see who will be willing to rise to the challenge. The governor is the only candidate that will automatically participate because he is required by law to make a decision on the capital budget. The governor still needs to agree to a specific date and time when he will communicate his decision on the capital budget to the public.

I am looking forward to sharing their responses to the challenge in a future article.