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Plans to find oil and natural gas offshore Alaska this year will have to wait as setbacks cause Shell to hold off on its 2012 drilling program in the Arctic. Instead, the company will focus on drilling top holes this year in preparation for next year’s drilling work.
Shell is giving up plans to drill into potentially hydrocarbon-bearing zones in the Arctic this year, following a series of setbacks that make the task difficult to accomplish.
The latest blow came when the containment dome aboard the Arctic Challenger barge was damaged recently during a final test. The time required to repair the damage will take some days, according to Shell. And with the Sept. 24 deadline to wrap up drilling in the Chukchi Sea only a week away, the company has decided to hold off on drilling for oil or gas and instead focus on drilling as many top holes in the Arctic as time allows. The work will be done in preparation for drilling in 2013.
“We are disappointed that the dome has not yet met our stringent acceptance standards; but, as we have said all along, we will not conduct any operation until we are satisfied that we are fully prepared to do it safely,” a public statement from Shell noted.
The containment barge is crucial to the company’s drilling plans. Without the barge, which would carry the containment dome capable of being lowered to a wellhead if a spill occurs, the federal government will not give the company the go-ahead to tap into oil-bearing zones. Certification of the barge is needed to trigger the final permits needed for the drilling program.
In August, Shell was given permission to commence activity in non-oil-bearing zones. Such work included creating a mud line cellar for a BOP along with drilling and setting the first two strings of casing into shallow zones that don’t bear oil. The company started work on Sept. 9 in the Burger A prospect, about 113 km (70 miles) off the coast of Wainwright, Alaska, but had to halt operations a day later to avoid potentially encroaching sea ice and move the Noble Discoverer drillship.
The company cited the drillship’s move as evidence of its ice management operations capabilities when it comes to removing its vessels out of the path of sea ice. In the days ahead, the drillship will return to its position and resume drilling operations, according to Shell.
Shell also plans to push forward with allowable exploratory drilling in the Beaufort Sea following the end of the fall whale hunt season and the expected receipt of a top hole drilling permit.
Despite the latest news and challenges, which have included coping with Mother Nature as well as permitting delays, Shell said important progress has been made with its multiyear drilling program for offshore Alaska. The company pointed out its two drillships, 20-plus support vessels, an approved capping stack, and other positioned oil spill response equipment.
“We have tested and assembled drillships and support vessels, trained personnel, and acquired numerous final approved plans and permits,” Shell said. “This exploration program remains critically important to America’s energy needs, to the economy and jobs in Alaska, and to Shell.”
Shell has spent more than US $4.5 billion in preparation for its latest Arctic drilling effort.
The Alaska Arctic region holds the largest amount of undiscovered Arctic oil deposits, about 30 Bbbls, according to estimates from the US Energy Information Administration.
The US Geological Survey estimates about 90 Bbbl of oil, 1,669 Tcf of natural gas, and 44 Bbbl of NGL may remain undiscovered in the Arctic. The figures represent about 22% of the world’s undiscovered conventional oil and natural gas resource base, about 30% of its undiscovered natural gas resources; about 13% of the undiscovered oil resources; and 20% of the world’s NGL resources. Most of the natural gas and NGL are located among the Eurasian continents’ part of the Arctic, while the North American territory is believed to have more oil.
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