• 2 hours Oil Nears $52 With Record OPEC Deal Compliance
  • 5 hours Saudi Aramco CEO Affirms IPO On Track For H2 2018
  • 7 hours Canadia Ltd. Returns To Sudan For First Time Since Oil Price Crash
  • 8 hours Syrian Rebel Group Takes Over Oil Field From IS
  • 3 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 3 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 3 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 3 days Schlumberger Warns Of Moderating Investment In North America
  • 3 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 3 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 3 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 3 days New Video Game Targets Oil Infrastructure
  • 3 days Shell Restarts Bonny Light Exports
  • 3 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 4 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 4 days British Utility Companies Brace For Major Reforms
  • 4 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 4 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 4 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 4 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 4 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 4 days Rosneft Signs $400M Deal With Kurdistan
  • 4 days Kinder Morgan Warns About Trans Mountain Delays
  • 5 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 5 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 5 days Russia, Saudis Team Up To Boost Fracking Tech
  • 5 days Conflicting News Spurs Doubt On Aramco IPO
  • 5 days Exxon Starts Production At New Refinery In Texas
  • 5 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 6 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 6 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 6 days China To Take 5% Of Rosneft’s Output In New Deal
  • 6 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 6 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 6 days VW Fails To Secure Critical Commodity For EVs
  • 6 days Enbridge Pipeline Expansion Finally Approved
  • 6 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 6 days OPEC Oil Deal Compliance Falls To 86%
  • 7 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 7 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

More Info

Shell Takes Initial Step Towards Arctic Drilling in 2014

Shell Takes Initial Step Towards Arctic Drilling in 2014

On November 6 Shell announced it submitted revisions to its Plan of Exploration to the U.S. government, a regulatory hurdle it needed to clear in order to keep Arctic drilling plans open for 2014. Shell has not decided whether it will proceed with exploration operations next year, but wanted to keep its options open. The plan, submitted to the Bureau of Ocean Energy Management, calls for a narrower approach to the Arctic, ruling out exploration in the Beaufort Sea. Instead, the company hopes to drill exploration wells only in the Chukchi Sea.

Shell’s Arctic campaign, closely watched by the oil industry around the world, has thus far been tormented by setbacks and controversy. After the Kulluk aground near Kodiak Island on December 31 of last year, Shell has decided to retire the troubled drilling rig at a cost of a “few hundred million” dollars. The oil company will move forward with the Noble Discoverer to drill several wells in the coming years, using Transocean’s Polar Pioneer as a backup.

Related article: Shell Announces Plans to Resume Arctic Oil Exploration in 2014

After sinking an estimated $5 billion into its Arctic venture, Shell has yet to prove it can drill safely in the far north. The multiple problems in 2012 prompted a full review of the Arctic drilling campaign by the Department of the Interior, which it published in March 2013. It concluded that Shell’s failure to meet regulatory guidelines was due to “shortcomings in Shell’s management and oversight of key contractors.” Shell cancelled drilling plans for 2013 while it regrouped, and many wondered whether Shell’s failure would shelve Arctic oil drilling for the near future, at least in U.S. waters. Shell’s latest submission of exploration plans is a sign they are not ready to give up.

The outcome of Shell’s Arctic campaign has huge ramifications. Alaska’s outer continental shelf is estimated to hold 29 billion barrels of oil, by far the largest single oil basin in the Arctic, representing one-third of total Arctic oil reserves worldwide. This is a huge prize for those willing to take on the harsh Arctic conditions, including severe storms, perilous ice conditions, and lack of infrastructure.

Offshore oil production in the Arctic will also have an enormous impact on the future of the state of Alaska, a veritable petro-state. Over 90% of Alaska’s discretionary spending comes from oil revenue, yet production has been in terminal decline for over two decades. Alaskan oil production, which almost entirely comes from the North Slope, peaked in 1988 at just over 2 million barrels per day. As of August 2013, that number has dropped by 80%, down to 428,000 barrels per day. It is no wonder why both Democrats and Republicans in the state support oil drilling offshore, as well as onshore in the National Wildlife Refuge.

Oil Production in Alaska
Source EIA

Related article: UK to Use its North Sea Experience to become a Hub for Arctic Oil Exploration

Still, Shell has a long way to go before it can commence exploration. Stemming from the March 2013 review of Shell’s program, the Department of the Interior is working on proposed regulations that will be specific to the Arctic, which may include requirements on subsea spill containment and the ability to drill a relief well in the event of a spill. The draft rules are expected to be released by the end of the year.

By. Nicholas Cunningham of Oilprice.com




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News