Good News in Arctic Oil Drilling!

When we started 2012 there were 3 Oil Companies with licenses to drill in the Alaskan Arctic- Statoil (Norwegian), Royal Dutch Shell, and ConocoPhillips.

Last fall Statoil announced it was not going to start Arctic activity before 2015, well before the scope and depth of the Shell failure became apparent.  Woefully ill-prepared Shell was forced to withdraw after they wrecked all their equipment (to the tune of $4.5 Billion and counting) and send it to South Korea for repair.

This week ConocoPhillips announced that it will not start operations until 2014 at the earliest either.

All these companies cite ‘regulatory uncertainty’ as the reason.  This means they are uncertain whether they will be regulated at all or be able to create Deepwater blowout whenever they want.

ConocoPhillips Suspends Its Arctic Drilling Plans

By CLIFFORD KRAUSS, The New York Times

Published: April 10, 2013

The decision had been expected after last month’s announcement by the Interior Department that Shell Oil Company would have to provide a detailed plan addressing numerous safety issues before it could resume its drilling operations in Alaska’s Chukchi and Beaufort Seas. Shell was forced to remove its two drilling rigs from the area and send them to Asia for repairs after a series of ship groundings, weather delays and environmental and safety violations during the 2012 drilling season. Shell, which has spent more than $4.5 billion on its exploration program, also called off its drilling program for this year.

“Companies can’t be expected to invest billions of dollars without some assurance that federal regulators are not going to change the rules on them almost continuously,” she (Senator Lisa Murkowski R Alaska) said. “The administration has created an unacceptable level of uncertainty when it comes to the rules of offshore exploration that must be fixed.”

The Interior Department’s review, completed in early March, concluded that Shell had failed in a broad range of operational and safety tasks, including the towing of one of the two drilling rigs, which ran aground on an Alaskan island on New Year’s Eve. David Lawrence, the executive vice president who was in charge of the Alaska drilling program, recently left the company. The company said that the departure was “by mutual consent.”

ConocoPhillips joins hiatus in offshore Arctic operations

By Kim Murphy, Los Angeles Times

April 10, 2013, 1:19 p.m.

Statoil announced last fall that it was postponing its Arctic debut until at least 2015, and company spokesman Ola Morten Aanestad said even that is not a firm commitment. “The earliest possibility would be 2015, but we have not decided that it will be drilled in 2015,” he told the Los Angeles Times on Wednesday.

ConocoPhillips had planned to drill one well, and possibly two, in its Devil’s Paw prospect about 120 miles west of the village of Wainwright, significantly farther offshore than Shell’s operations in 2012.

One issue undoubtedly delaying federal approval of ConocoPhillips’ drilling plans was the company’s intention to use for the first time in the Arctic a jack-up drilling rig, which, unlike the floating rigs Shell employed, would attach to the ocean floor.

Questions have been raised about whether the company would be able to operate safely in the event of swiftly arriving ice packs, as happened during the opening days of Shell’s season in 2012, when its rig was forced to sail away from an advancing ice floe.

Sources familiar with talks between the federal government and  ConocoPhillips  said there were also questions about how the company would comply with requirements that it be able to drill a relief well in the event of a blowout that couldn’t otherwise be contained.

“There’s no reason the government should be operating with these clearly failed standards and oversight, and Conoco’s decision really provides more room to move forward and make operations safe. We really need to make sure that accidents, mishaps and disasters stop,” Christopher Krenz, Arctic program manager for Oceana, said in an interview.

In a big blow to Arctic exploration, Conoco’s offshore-drilling program on hold

Alex DeMarban, Alaska Dispatch

April 10, 2013

The announcement means there may be little oil activity on Alaska’s outer-continental shelf this summer, in part because other companies, including Norwegian oil giant Statoil, have followed the lead of Shell and Conoco.

The report followed Shell’s blunder-filled inaugural season of Arctic exploration, capped by the grounding of the Kulluk drill rig near Kodiak during a powerful winter storm.

The Alaska Wilderness League said industry and the government need time to figure out the next steps, because the risks of drilling in the undeveloped Arctic are extreme.  

“This pause is a real opportunity for President Obama to revisit his position on Arctic Ocean drilling,” said executive director Cindy Shogan. “With no infrastructure or ability to clean up an oil spill in ice, and Shell’s extensive laundry lists of mishaps and failures, it is a no brainer to suspend drilling in the Arctic. If President Obama truly wants to address his climate change legacy, saying no to Arctic Ocean drilling would be a huge first step.”

She added: “Today’s announcement from ConocoPhillips is further proof that no oil company is ready to drill in the harsh and unpredictable environment of the Arctic Ocean.”

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