After a disastrous campaign in 2012, which forced the company to abandon all plans for this year, Royal Dutch Shell has announced that it will return to the Arctic waters in 2014 to begin exploring for oil again, but on a much smaller scale.
One of the main differences this time will be the abandonment of the Kulluk conical drilling rig that ran aground last time as Shell tried to toe it back to Port near the end of the 2012 drilling season. As a replacement Shell has leased out the Polar Pioneer, a semi-submersible drilling rig owned by Transocean. The Kulluk may well be put back into operation at some other point in the future, but only if it is deemed cost effective to repair the damaged unit.
Shell has spent eight years and almost $5 billion trying to create a new generation of Arctic oil production. It is the largest project that Shell is involved in, and Simon Henry, the company’s chief financial officer, has claimed that it has the potential to be a multi-billion barrel operation.
Problems experienced during the 2012 Arctic drilling season, specifically the damage suffered by a specialised oil spill continent system, meant that Shell could only perform top-hole drilling for its wells; it now plans to go back and complete the wells.
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Henry revealed that Shell would soon provide a blueprint to the Interior Department for its plans to resume drilling in the Chukchi Sea, and that no intentions exist to move back to the Beaufort Sea just yet.
“We have not yet confirmed if we drill in 2014,” said Henry. “Clearly, we would like to drill as soon as possible, so we are putting the building blocks in place. There remains a permitting and regulatory process through which we need to go, before we can confirm a decision to actually drill in 2014.”
Despite Shells intentions to return to the Arctic, there still remain several obstacles to overcome before this can be achieved:
Shell must still allow a third-party audit of its management systems, as requested by the regulators.
The blueprint that the company plans to submit for operating in the Chukchi Sea must pass an environmental review and achieve public approval, which Fuel Fix suggests could last for months.
And then the Polar Pioneer rig will need to be approved as a back-up drilling rig, so that it can drill a relief well in the case of a leak from a main well.
By. Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com