Citing unease over changing US regulations, ConocoPhillips opted to pause plans for its 2014 Alaska Chukchi Sea drilling program, the supermajor announced on 10 April 2013.
Shell's oil spill response teams practice laying out nearly 600m (1,500ft) of a floating curtain-like device designed to contain oil from the Nanuq response vessel near Valdez, Alaska.The company said it would not be practical to make monetary commitments given uncertainties of evolving federal regulatory requirements and operational permitting standards.
“While we are confident in our own expertise and ability to safely conduct offshore Arctic operations, we believe that more time is needed to ensure that all regulatory stakeholders are aligned,” said Trond-Erik Johansen, President of ConocoPhillips Alaska.
An Interior department report released last week was primary cause for concern. The report called on industry and government to work together to develop an Arctic-specific model for exploration off Alaska. The model would focus on standards in the areas of drilling, maritime safety and emergency response equipment and systems.
“We welcome the opportunity to work with the federal government and other leaseholders to further define and clarify the requirements for drilling offshore Alaska,” Johansen said. “Once those requirements are understood, we will re-evaluate our Chukchi Sea drilling plans. We believe this is a reasonable and responsible approach given the huge investments required to operate offshore in the Arctic.”
The ranking Republican on the US Senate Energy and Natural Resources Committee, Lisa Murkowski of Alaska, said ConocoPhillips’ decision was disappointing but not unexpected.
“The administration has created an unacceptable level of uncertainty when it comes to the rules for offshore exploration that must be fixed if we’re going to end our dependence on oil from the Middle East,” Murkowski said.
Last week’s report followed an Interior Department review released in March concerning Royal Dutch Shell’s 2012 Arctic program. The program’s end saw the Kulluk drilling rig run aground in late December during a tow from Alaska to Seattle.
The review found that Shell failed to finalize key parts of its program, including securing the certification of its containment vessel Arctic Challenger, before entering its 2012 drilling season. The company has since halted its 2013 Arctic program.
“Shell simply did not maintain strong, direct oversight of some of its key contractors,” said Deputy Assistant Secretary for Land and Minerals Management Tommy Beaudreau, when the review of Shell’s program was released last month. “Working in the Arctic requires thorough advance planning and preparation, rigorous management focus, a close watch over contractors, and reliance on experienced, specialized operators who are familiar with the uniquely challenging conditions of the Alaskan offshore. In some areas Shell performed well, but in other areas they did not, and Alaska’s harsh environment was unforgiving.”
Environmental advocacy group Oceana applauded ConocoPhillips decision.
“The Arctic is a remote and harsh place to work; specific standards and technologies are needed to protect this region’s ecosystems. There is no reason that the government should be operating with clearly failed standards, and Conoco’s decision provides more room to move forward and allow for safer operations,” said Susan Murray, Oceana’s Deputy Vice President, Pacific. “The oil is not going anywhere, but the technology and drilling standards for the region can improve.”
In 2008, ConocoPhillips acquired 98 leases off Alaska’s northwest shore in Lease Sale 193 at a cost of US$506 million. Had the 2014 Arctic program moved forward, ConocoPhillips said it would have drilled up to two exploration wells in the Devils Paw prospect area, 80 miles off the coast line.
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