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Alaska Offshore Special Report: Making the case for Alaska OCS development
Joe Balash Deputy Commissioner, Alaska Department of Nat
Our country’s growing demand for oil combined with our desire to be more self-reliant in filling this demand has spurred significant interest in offshore drilling in both the Arctic Ocean and the Gulf of Mexico.
Last year’s disastrous gulf spill had the unfortunate consequence of placing the near-term prospects of Arctic offshore drilling in “deep water” – a consequence that is as inaccurate as it is damaging for exploration of Alaska’s OCS and our state and national interests. Alaska is, as so often the case, different. In some ways, the punishing Arctic climate is a challenge, but in other ways, it provides a distinct advantage to exploration and development compared to what is needed for deepwater offshore oil and gas plays.
There are a number of significant differences between drilling in Alaska’s Beaufort and Chukchi seas and drilling in the Gulf of Mexico. Some are environmental and operational, while others are attributed to differences in climate. There are also differences in the oversight and regulatory processes, as well as fundamental contrasts in the geology of the regions.
Much shallower waters The continental shelf off the northern coast of Alaska stretches beneath the shallow Beaufort Sea for about 50 miles to a series of hinge-like faults that mark the edge of the Arctic Ocean’s continental slope. The geology of the continental shelf forms an extension of the onshore geology of the region.
The Beaufort and Chukchi seas extend over state waters, but the majority of these bodies of water are part of the federally managed OCS.
In the Beaufort water depths range from approximately 0-65 feet (0-20 m). Nearly all the historically leased acreage in the Beaufort Sea OCS planning area lies in waters inboard of the 330 ft (100 m) depth contour and all current leases in the Chukchi Sea are in water on the order of 130-160 feet (40-50 m) deep. Contrast this with the deepwater setting of the Gulf of Mexico, where drilling regularly taps prospects beneath waters more than 5000 feet (1500 m) deep.
Since the first lease sale in 1979 (the first one held jointly by the state and the then US Minerals Management Service) over 30 exploration wells have targeted prospects in a range of plays, and discovered some sizeable petroleum accumulations under the Beaufort Sea. The 202 million-barrel Northstar oil field north of Prudhoe Bay went into production in 2001, and has since produced nearly 142 million barrels of oil (Dec. 2009). Production in the Northstar, Endicott, Oooguruk and , most recently, the Nikaitchuq fields abutting the Beaufort Sea tap offshore reservoirs through extended-reach directional drilling sites from stable, man-made gravel islands. In effect these are quite similar to onshore operations.
Divers, nor remotely operated units The significance of the shallow water depth cannot be overstated in comparison with deepwater operations. Despite the cold ocean water temperatures, human dive teams are able to operate directly on the seafloor in many places in offshore Alaska, whereas highly specialized remotely operated vehicles are required to investigate and respond to incidents at the seabed in deepwater Gulf of Mexico operations.
Many Alaskan offshore operations are seasonal, whereas Gulf of Mexico operations continue year-round. Some Alaskan exploration prospects are better drilled in the winter from bottom-founded drilling caissons or man-made ice islands, both firmly anchored to the seabed throughout the drilling season. Other Alaskan prospects are drilled from floating drill ships or jack-up rigs in the open water of late summer. These drilling projects commonly include ice-breaker support vessels to manage floes of multi-year ice that may sometimes approach the drilling well and occasionally interrupt operations by forcing the rig to move off location.
Broken ice season In either winter or summer operations in the Alaska Arctic, special stipulations throughout the leasing, exploration, and development stages are strictly enforced to minimize hazardous activities during the broken ice season, when spill cleanup would be the most challenging.
Beyond operation distinctions, the geology of Beaufort and Chukchi Sea petroleum systems differs from those of the Gulf of Mexico in important ways. Much of the Gulf region is marked by rapid and recent deposition of alternating sands and muddy sediments that, due to deep burial and compaction, create strongly over-pressured fluids. Deep drilling in such environments is especially difficult because of the high drilling mud densities required to control overpressurization. Overpressuring can fracture the formation causing catastrophic losses of drilling fluids triggering blowouts. The geologic setting of the Alaskan offshore is very different, marked by less recent and less voluminous sedimentation, and dangerous overpressures are not understood to be widely present.
A long and proud safety record Although concerns regarding blowout prevention equipment are justified, Alaska has a long and proud record of safe oil and gas drilling. In large part, this is because of a regulatory framework based on an extensive and specialized knowledge of the Alaska drilling environment and the proactive assistance provided by regulators to explorers and developers to manage risk.
Alaska’s Oil and Gas Conservation Commission (AOGCC) exercises regulatory oversight of wells drilled in Alaskan state waters, including regulation, permitting, and inspection of wells and equipment. Originally a part of the state’s Division of Oil and Gas, the AOGCC became an independent, quasi-judicial agency within the executive branch. This separation alleviated potential conflict between the state’s revenue interests in achieving total ultimate recovery on state leases, with the equally important conservation interest of ensuring the most prudent oil field practices are routinely performed.
A substantial purpose for the state’s oversight efforts is to ensure that the blowout prevention equipment is never needed. All other aspects of drilling have been planned appropriately and in a way that functions optimally in the specific drilling environment.
With these differences in in mind, and the experience present in producers and agencies already operating in arctic Alaska, fears raised by the accident in the Gulf of Mexico should not carry over to the completely different environment in the Alaskan OCS.
Alaska’s resources needed Alaska holds tremendous resources. Our state is estimated to hold 18 percent of total U.S. oil reserves. At a production rate of nearly 700,000 barrels per day, Alaska is currently responsible for 14 percent of U.S. oil production. Developing Alaska’s resources is good for the state and our nation. Oil production from the aging fields on the North Slope, which have provided our country with a steady stream of oil since 1977, is declining.
The offshore resources in Alaska’s state waters are an important part of the country’s energy future and are needed to stem the decline of domestic oil and gas production. As Alaskans, we have complete confidence that the expertise our agencies possess, and the regulatory framework this expertise has created, is appropriate and sufficient for us to invite prudent operators to produce our hydrocarbon resources while protecting our other natural resources.
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