Friday, July 29, 2011

More OCS permits; EPA issues draft Arctic air quality permits for Shell & ConocoPhillips

Alan Bailey, Petroleum News

Just a few weeks after the EPA’s release of draft air quality permits for Shell’s planned use of the drillship Noble Discoverer in Alaska’s Arctic offshore, on July 22 the agency issued corresponding draft permits for Shell’s Kulluk floating drilling platform in the Beaufort Sea, and for ConocoPhillips’ planned use of a jack-up rig in the Chukchi Sea. Shell proposes starting to use the Kulluk for exploration drilling in the Beaufort during the 2012 open water season, while ConocoPhillips plans to commence its Chukchi Sea exploration drilling program in 2013.

Public comments on the new permits are due by Sept. 6, with public hearings scheduled in Barrow and Anchorage in late August. EPA says that it will consider all comments received before making final permit decisions.

Major hurdle
Following a litany of appeals against multiyear attempts by Shell to obtain air permits for its planned Alaska drilling, the permits are proving a major hurdle along the route toward driving drill bits into some promising oil and gas prospects under Alaska’s northern outer continental shelf. In the most recent appeal the Environmental Appeals Board ordered EPA to make several changes to earlier versions of Shell’s permits, and the EAB mandated changes appear to have been carried forward into the new Kulluk and ConocoPhillips permits.

Facing much flak from supporters of Alaska natural resource development over continuing delays in the issuance of air permits sufficiently robust to withstand appeal, EPA’s issue of a flurry of draft permits perhaps reflects a sense of urgency over clearing the permitting logjam.

“I’ve repeatedly asked the Obama administration to put words into action when the president has stated he supports further oil and gas exploration in Alaska,” said Sen. Mark Begich on July 22. “I believe the EPA moving multiple permits forward for public comment in a short amount of time shows that support is real, and there is a recognition Alaska is key to more domestic oil and gas production.”

Sen. Lisa Murkowski expressed some caution.

“Permitting has been the greatest obstacle to our being able to discover and develop new oil prospects in Alaska, so any progress on that front is welcomed,” she said. “Far too often, however, we have seen the permitting process break down at the last moment over environmental challenges. It is my hope that the final approval of these permits will proceed in a fair, timely manner, and that the EPA’s work will stand up to the inevitable challenges from environmental activists.”

Shell has said that it plans drill to up to 10 wells, starting in the open water season of 2012, with up to two wells per year to be drilled in the Beaufort Sea and up to three wells per year in the Chukchi Sea. To meet air quality requirements, Shell has already modified the engine exhaust systems on the Noble Discoverer — the company has now dispatched the Kulluk to Seattle for air-quality-related power plant and generator upgrades.

Kulluk in the Beaufort
And, although Shell’s air quality permit for the Kulluk leaves considerable latitude over the choice of the Beaufort Sea tracts in which Shell could drill, the company’s most recently filed exploration plan indicates an intent to target the Sivulliq and Torpedo prospects, on the west side of Camden Bay, east of Prudhoe Bay. In the Chukchi Sea, the Noble Discoverer would target the Burger prospect, a 25-mile-diameter structure that is known to hold a major natural gas pool some 80 miles offshore the western end of Alaska’s North Slope.

A major point of contention in the appeals over Shell’s air quality permits has been the question of defining the periods within which a drillship becomes a stationary emissions source, requiring an air permit, rather than a regular vessel plying the ocean — the quantity of total emissions regulated as part of a drilling operation becomes larger as the stationary source time period lengthens. The permit for the Kulluk considers the drilling vessel to be a stationary source when the vessel is moored at a drill site by at least one anchor, a stationary source definition consistent with the recently published Noble Discoverer permit. The Kulluk has a total of 12 anchors arranged around the vessel’s perimeter to hold the vessel in position over the well being drilled, with those anchors being positioned in sequence by an anchor handling vessel before a drilling operation commences, and then being removed in sequence after the drilling has been completed, according to information supplied with the air permit.

Fleet emissions
Another bone of contention has been the predicted air emissions from the fleet of vessels such as icebreakers and anchor handlers supporting the drilling vessel. The Kulluk air permit considers these support vessels to be emissions sources when they are located within 25 miles of a drilling operation.

Shell has to notify EPA of the Kulluk’s planned drill sites by April 1 of the year in which drilling at those sites takes place, with drilling limited to a total of 120 calendar days per year, between July 1 and Nov. 30. Drilling activity cannot exceed 1,632 hours within a single drilling season, and there are specific annual limits on the emission of pollutants such as nitrogen oxides, carbon monoxide and sulfur dioxide. Carbon dioxide and other greenhouse gases are included in the regulated emissions inventory, and there are limits on the quantity of particulates allowed in engine exhaust.

Devil’s Paw

ConocoPhillips says that it plans to use a jack-up rig to drill in the Chukchi Sea Devil’s Paw prospect, 70 to 90 miles offshore, starting in 2013. Company spokeswoman Natalie Lowman told Petroleum News in a July 26 e-mail that the company is applying for its air permit well ahead of when the permit is needed to allow time for permit reviews.

The company has not yet contracted a specific rig and support vessels — for the purposes of its air quality permit the company has presented emissions data for equipment similar to what it expects to use. In addition to the drilling rig, ConocoPhillips anticipates using a support fleet that potentially includes up to two icebreakers, oil spill response vessels, workboats, supply vessels, a warehouse vessel, an anchor handling tug and a marine research vessel.

A jack-up rig is floated into position at a drill site but has legs that are lowered to the seafloor to lift the rig platform above the sea surface while drilling is in progress. ConocoPhillips’ air quality permit considers the rig to be a stationary emissions source whenever the body of the rig is lifted above the water and is out of contact with sea waves. And, as with the Shell permit, the emissions from support fleet vessels are regulated when within 25 miles of a drilling operation.

ConocoPhillips must notify EPA of planned drill sites by April 1 of the year in which the drilling at those sites is to take place, and drilling can only be done between July 1 and Nov. 30. In a similar manner to Shell’s permit for the Kulluk, there are specified limits for the emissions of various pollutants during drilling operations.

----------------------------------------
Republished with the permission of the Petroleum News