Replies to post #868 on The Rising Influence of Rising Affluence

[DewDiligence]

CVX Wins C$103M Bid for Beaufort Sea Block

[This block appear to be less controversial than Shell’s blocks in the Chukchi Sea, which are the subject on ongoing litigation (#msg-50237082).]

http://www.reuters.com/article/idAFN0625691320100806

›Aug 6, 2010 2:17pm EDT

CALGARY, Alberta, Aug 6 (Reuters) - Chevron Corp (CVX) has acquired an exploration license for the Beaufort Sea in Canada's Far North with a C$103.3 million ($101 million) bid as the country gets set to review offshore drilling following the BP oil spill in the Gulf of Mexico.

Indian and Northern Affairs Canada, which is responsible for oil and gas activity in the Arctic, awarded Chevron a 205,946 hectare (508,800 acre) block north of the Yukon coast and just east of the Canada-U.S. boundary.

The acreage was up for grabs as part of a 2009-10 call for bids and follows Chevron's last winning Beaufort acreage bid, a C$1 million package in 2007.

The company has yet to devise seismic and drilling plans for the new block, Chevron Canada Vice-President David MacInnis said. The plans will require approval by Canada's National Energy Board.

Chevron already had interests in 10 Beaufort discoveries, including 33 percent of the 1986 Amauligak find and 13 percent of the adjacent Issungak discovery.

Its latest acquisition comes after a nearly C$600 million acquisition of Beaufort Sea exploration rights in 2007 by Imperial Oil Ltd (IMO.TO) and Exxon Mobil Corp (XOM) and a C$1.2 billion winning bid for acreage by BP Plc the following year.

Last month, the three formed a joint venture to explore on their parcels to avoid duplication of equipment and personnel in the remote, icy region.

MacInnis said Chevron was not part of that tie-up, but was open to looking for opportunities to work with other players in the industry.

Imperial said last week that the partners will not start exploratory work until after the NEB completes its review of offshore safety and environmental impact. The regulator announced the review in response to heightened government and public concern after the U.S. Gulf spill.

Chevron will participate in the proceedings, MacInnis said.

"We're looking forward to the review and putting forward some ideas as to how to improve performance and especially address questions that are coming up on oil spill prevention and containment," he said.

When the NEB announced the review in May, it canceled a planned hearing on a request from BP and Exxon to reexamine a requirement that Arctic drillers need to drill a relief well in the same season that an exploratory well is completed.

There is no date yet for when the review is to begin.

Chevron is operating Canada's only current offshore drilling project, the deep water Lona 0-55 well in the Orphan Basin off the coast of Newfoundland. It is expected to reach its target depth next month.‹

[DewDiligence]

Chukchi Sea Is Still a No-Go for Shell

http://online.wsj.com/article/SB10001424052748703808704576061993221978686.html

›JANUARY 4, 2011, 4:16 P.M. ET
By GUY CHAZAN

Royal Dutch Shell suffered a new setback to its plans to drill offshore in the arctic, after environmentalists successfully challenged a decision to grant the company air-quality permits.

Shell has invested $3.5 billion in an exploration program in Alaska's Beaufort and Chukchi seas, but has yet to drill. The company's plans have been dogged by legal challenges and regulatory obstacles.

Shell had finally overcome all hurdles last spring, until BP PLC's Gulf of Mexico oil well exploded, triggering the worst offshore oil spill in U.S. history. The Obama administration responded by suspending most new offshore drilling, including in the arctic, throwing Shell's exploration program into disarray.

Yet the Anglo-Dutch oil company remains committed to the region, which it believes contains up to 25 billion barrels of oil reserves—most of it in the Chukchi Sea. In 2008, Shell spent $2.1 billion to obtain leases in the Chukchi.

After the moratorium was lifted, Shell scaled back its plans, resubmitting its application to drill in the Beaufort but postponing a plan to enter the more remote Chukchi Sea pending the outcome of various legal challenges.

The company was planning to drill an exploratory well in the Beaufort this year. But without clean-air permits, it will struggle to meet that deadline.

Shell was issued the air-quality permits by the U.S. Environmental Protection Agency last year, allowing the company to operate the Frontier Discoverer drilling ship and support vessels, such as icebreakers and a supply ship, in the Chukchi and Beaufort seas. But two conservation groups and a group representing Native American communities in Alaska requested a review, arguing that in granting the permits, the EPA had applied outdated nitrogen-dioxide standards.

In a decision filed Dec. 30, the EPA's Environmental Appeals Board agreed with the petitioners, saying the analysis of the impact of the nitrogen-dioxide emissions on people living on Alaska's North Slope had been "limited in scope." It remanded the Beaufort and Chukchi permits, effectively sending them back to the EPA and Shell to be rewritten.

Shell said the decision was "very disappointing," given the efforts it had made to minimize the impact of air emissions on arctic air quality and North Slope residents. The company said it has consistently met or exceeded requirements for operating in the arctic and retrofitted the Frontier Discoverer with the best available technology for controlling emissions, at a cost of $25 million.‹