Alaska Sen. Begich holds hearing on Shell Oil's offshore Arctic drilling

 

The Anchorage Daily News

Better ice forecasting in the Alaska Arctic. More Coast Guard resources. More jobs for North Slope residents. A share of oil revenue for Alaska. Streamlined permits and regulation.

Those are some of the ideas presented Thursday to a U.S. Senate panel holding a field hearing in Anchorage on what was learned from this year's offshore drilling by Royal Dutch Shell in the Alaska Arctic.

The overflow crowd also heard specifics on what happened to a Shell oil spill response system damaged during testing.

With only weeks to go before Shell Alaska wraps up its first exploratory drilling offshore Alaska in two decades, key players told the Senate Committee on Commerce, Science and Transportation that the work went well and Shell has done an exemplary job despite some glitches and setbacks.

But they worry about what will follow.

"It's no longer a question of if the Arctic will be developed. It's how it will be developed," U.S. Sen. Mark Begich said in opening the hearing, which he chaired.

While he was the sole U.S. senator there, the meeting room on the University of Alaska campus overflowed with more than 100 people. Top government officials, Alaska Native leaders and the head of Shell Alaska all testified.

Pete Slaiby, Shell's vice president for Alaska, told Begich that Shell believes Alaska's offshore Arctic region "likely holds world class volumes of oil and gas."

If Shell's exploratory work gets to production, tens of thousands of jobs will be created and vast quantities of additional oil will move down the trans-Alaska Pipeline.

But Shell couldn't attempt to reach oil-bearing zones this year because of complications with its oil spill containment barge, the Arctic Challenger.

That was disappointing, Slaiby said.

HOW DOME WAS DAMAGED

The barge-based containment system, including a massive dome that would be lowered over an out-of-control well, is the first of its kind and was on fast track for completion, Slaiby said. It only became part of Shell's required oil spill response after the 2010 Deepwater Horizon blowout in the Gulf of Mexico.

Shell and Superior Energy Services, the contractor that owns and will operate the 38-year-old retrofitted barge, investigated how the dome was damaged during testing Sept. 15 off the coast of Washington state.

"Our investigation determined that a faulty electrical connection associated with one of the valves caused the valve to open, which caused the rapid descent and ultimate damage to the dome," Slaiby told Begich.

Safety tethers prevented the dome from hitting bottom, he said. The dome was nowhere near the side of the barge and didn't bang against it or hit anything else, Slaiby told reporters during a break in the hearing.

"But buoyancy chambers were damaged," he said.

During the rapid descent, the water pressure "deformed the side of the dome itself," he said. Shell and Superior are working together to improve the technical aspects of the system as well as procedures.

"The design concept, however, is solid," Slaiby said in the hearing.

The oil spill containment barge is the fourth line of defense, he said. Crews would first try to stop a blowout with drilling mud, then turn to a blowout preventer already in place, then a capping stack, a special blowout preventer like what eventually stopped the oil from flowing from the Deepwater Horizon blowout.

COAST GUARD IMPRESSED

Only after all that would the dome be lowered down, connected by hose to a mini-oil production system on the barge.

"I was astonished at the level of effort that went into this," Rear Adm. Thomas Ostebo, the commander of the Coast Guard in Alaska, said during a break in the hearing.

Ostebo, the former chief engineer of the Coast Guard, described the engineering effort for the Arctic Challenger this way:

"You're talking about a first-of-kind vessel that in less than six months they took a Arctic class barge ... perfectly flat, half the size of a football field, and built an entire production facility on it, berthing for 70 people, and the ability to raise and lower a dome above a loss-of-well control that allowed them to ... flare gas, process oil and clean the water and put it back in the ocean."

The Coast Guard, which earlier had identified a number of issues with the vessel that had to be addressed, just issued a certificate of inspection for the barge, clearing it to operate at sea. The American Bureau of Shipping has classified the unique barge as well. The issues are all normal evolution for a new vessel, Ostebo said. Nothing really went wrong, he said.

David Hayes, deputy secretary of the Department of the Interior, said that Shell is complying with regulations that he called the government's "gold standard for safe and environmentally sound exploration activities."

Shell's two drilling rigs are still at work drilling the time-consuming initial stages of wells. The Noble Discoverer is 70 miles offshore in the Chukchi Sea, and the Kulluk is offshore, but not as far out, in the Beaufort Sea.

Each are excavating cellars to hold a blowout preventer and drilling holes some 1,500 feet down as the first stage of a well. Slaiby said they will return to finish those wells and more next year.

TO DO LIST

Still, the Senate committee was told that more needs to be done to ensure safe development in the Arctic.

New technologies for better forecasting of sea ice, new nautical charts and continued coverage by polar-orbiting satellites are all essential, said Laura Furgione, a top official for weather services with the National Oceanic and Atmospheric Administration.

The satellites receive signals from distressed mariners and aviators, but one may expire before the next one gears up. As to the nautical charts, some 17,000 miles of Alaska coastline and 240,000 square nautical miles of water need new or updated surveys, she said.

Hayes told Begich that scientific research must be more closely linked to decisions by government regulators. To that end, the Arctic Research Commission and its chair, former Alaska Lt. Gov. Fran Ulmer, are working to develop a database of scientific information and traditional knowledge that relates to management of resources in the Arctic.

Slaiby said that an effort by the Obama administration to better coordinate permits and regulatory hoops through a high-level group headed by Hayes made all the difference, but he wondered whether it can be sustained.

And Alaska Native leaders told Begich that offshore development brings great risk and change -- and that their communities should see more benefit.

Jacob Adams, chief administrative officer for the North Slope Borough, said Alaska Natives are frustrated mainly because they don't feel they have a seat at the decision-making table.

Congress needs to at least carve out a share of oil revenue from offshore drilling in federal waters for local communities, he said.

And while North Slope residents were glad the Coast Guard staged ships and helicopters there during Shell's drilling season, more investment in Coast Guard communications and icebreakers is needed and the agency should be in the northern region year-round, Adams said.

Edith Vorderstrasse, a manager with a subsidiary of the Ukpeagvik Inupiat Corp., said the federal government should create a revolving loan fund for local communities impacted by offshore development. Already Wainwright and Barrow are being strained by demands on housing, electrical generation, and water and sewer services related to Shell's exploration, she said.

Many Alaska Natives feel they've missed out on meaningful work on the North Slope, but maybe with offshore production, they can be specifically trained and ready for the task, she said.

Shell executives at first seemed to be going through the motions of learning about local needs but gradually came to deep understanding, Vorderstrasse said. Other oil companies, she said, need to do the same.

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