Proceedings Of The Marine

FALL 2015

Proceedings magazine is a communication tool for the Coast Guard's Marine Safety & Security Council. Each quarterly magazine focuses on a specific theme of interest to the marine industry.

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Page 69 of 94

67 Fall 2015 Proceedings have produced oil since the 1980s, while others are still not developed. 12 There are two near-shore discoveries that strad- dle state and federal waters — the Northstar feld, which has been producing oil from an artificial island since 2001, and the Liberty feld, for which the Department of Interior's Bureau of Ocean Energy Management (BOEM) is reviewing a development and production plan. 13 A decade of sustained high oil prices, lasting roughly from 2004 to 2014, caused stakeholders to reassess the economic feasibility of U.S. Arctic OCS production. With oil frequently trading in excess of $100 per barrel, international oil companies decided to once again venture further offshore. Since the 2008 Chukchi Sea OCS lease sale, only Shell has attempted to drill exploration wells from foating rigs in the U.S. Arctic outer continental shelf. The company frst submitted a Beaufort Sea exploration plan in 2007 and a Chukchi Sea exploration plan in 2009. However, a combi- nation of legal challenges, the Deepwater Horizon incident, the global economic recession, and diffculty meeting all environmental compliance standards resulted in operations in both seas being delayed for several years. In 2012, Shell drilled two exploration wells, one each in the Beaufort Sea and Chukchi Sea planning areas, but was not permitted to drill to depths that would encounter liquid hydrocarbons because the company could not deploy the required Arctic containment system in case of a blowout. 14 Further, during the project's demobilization phase, the foat- ing rig Kulluk in the Beaufort Sea snapped its tow line while transiting from Dutch Harbor, Alaska, to Seattle, Washing- ton, and beached on a small island near Kodiak, Alaska. U.S. Coast Guard Air Station Kodiak MH-60 Jayhawk helicopter crews rescued the rig crewmembers. 15 So, despite years of planning, Shell's 2012 exploratory program was unable to drill even one exploratory well into a liquid hydrocarbon- bearing zone. U.S. Arctic Exploration and Production Challenges The challenges Shell faced in 2012 are characteristic of those for any company operating in the U.S. Arctic OCS. In July, the warmest month of the year, the average daily max tem- perature is only 47 degrees Fahrenheit. Shore-side supplies must be moved into position during the winter, using the snowy, icy roads before summer's melted permafrost makes many communities unreachable by truck. 16 Offshore, the ice-free season is less than four months, from July through October, creating a very short operational season for offshore drilling rigs. 17 Ice coverage is generally heavier and in place longer east of Point Barrow. However, the wind can blow the pack ice on and off the shore at the beginning and end of the ice-free season. 18 Additionally, the North Slope of Alaska is remote, and lack of infrastructure complicates project management. By road, it is 852 miles from Anchorage, Alaska, to Deadhorse, near Prudhoe Bay, and only one road, which is virtually unpaved for 414 miles, connects the North Slope to the major ports and population centers of the Gulf of Alaska. Cargo deliv- ered by sea to Alaska's North Slope oil and gas operations must be hauled to Prudhoe Bay by oceangoing tugs and barges that anchor nearly six miles offshore. Barrow, Alaska, the largest community on the North Slope, has no pier facilities. Cargo bound for Barrow is lightered from barges to landing craft. 19 There are two small ports in the Bering Strait region that can accommodate a limited number and types of vessels engaged in oil and gas operations — one at Nome, with a 175- foot dock and water depth of 21 feet; and the other, a very small port at Kotzebue, where ships must anchor offshore and shallow draft barges must lighter material to shore. The nearest Arctic deepwater port capable of handling a whole drilling operation feet is located at Dutch Harbor, Alaska, in the Aleutian Islands, more than 1,340 nautical miles from Prudhoe Bay. However, most hydrocarbon supplies and gear depart from Seattle, Washington, 3,072 nautical miles from Prudhoe Bay. 20 Offshore oil must be brought ashore by subsea buried pipe- lines, connected by overland pipelines to the Trans-Alaska continued on page 70 The Coast Guard assists a mobile drilling unit. U.S. Coast Guard photo by Petty Offcer Sara Francis.

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