Shell’s Ann Pickard says an offshore oil find in the remote Chukchi Sea could eventually yield 1 million barrels of oil daily, and she insists the company has learned from its messy Arctic exploration effort in 2012.
In a brief summer drilling season off Alaska’s Arctic shore, Shell’s Ann Pickard is on the hunt for a giant oil field, and she thinks she knows where to find it.
All of the vessels in the Arctic exploration fleet now gathering in Puget Sound will be headed to a spot in the Chukchi Sea where Shell first drilled in 1989 and 1990. At that site, called the Burger Prospect, the company found natural gas that Pickard hopes is sitting on top of the oil Shell seeks.
“We are going to focus on what I call the prize, and the prize to me is Burger,” said Pickard, Shell’s executive vice president for the Arctic. “If Burger works, then it opens up the whole area.”
Pickard, in an interview with The Seattle Times, said she hopes to find a reserve that could eventually yield 1 million barrels of oil a day — roughly equal to 5 percent of U.S. current consumption, and nearly double the current flows through the trans-Alaska pipeline.
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Shell’s investment in this search now totals nearly $7 billion. The company is expected to take several years of exploration to drill six holes and decide whether such a field exists.
Pickard acknowledges the Burger could be a bust, an outcome that could end Shell’s push to find oil off Alaska’s North Slope
“If it is a dry hole — there is nothing there — we’re done. If it is gas, I’m not excited,” she said.
Pickard — formally the executive vice president, Arctic, for global parent company Royal Dutch Shell — was in Seattle to oversee final preparations for a drilling season that environmentalists have sought for years to block due, in part, to the risks of an oil spill in the remote, biologically rich waters of the Arctic.
The drilling effort, and the decision to moor some of the drilling fleet at Seattle’s Terminal 5, have stirred up strong emotions here.
While the maritime community has embraced Shell’s exploration as a major new opportunity for family-wage jobs, environmental activists here organized a “Shell No” protest movement. Mayor Ed Murray, citing concerns about climate change, has given the activists a boost by saying he does not want the oil company to base its fleet here, and city officials have asserted that the Shell fleet’s activities at Terminal 5 violate the current land-use permit.
In her interview, Pickard made clear that Seattle — from a logistical standpoint — remains Shell’s first choice as an offseason home port for the Polar Pioneer. It is the massive oil rig that along with the Noble Discoverer drill ship will be used to sink holes in the Chukchi Sea.
“This is the ideal place for the Polar Pioneer,” she said. “The Noble Discoverer, it is not as big, and we can take it other places. But … it’s like Terminal 5 was made for the Polar Pioneer.”
Pickard indicated she had no plans to meet with Murray, but had met with Port of Seattle Executive Director Ted Fick.
“They (port officials) saw it as a real opportunity to bring jobs and money, obviously, into Terminal 5 and into Seattle,” she said.
Pickardsaid she doesn’t expect Shell to be done with its loading and supplying work at Terminal 5 by June 4, the deadline set by the city of Seattle for avoiding fines of up to $500 a day.
Though the Polar Pioneer is too big to fit into Everett, Pickard said she wishes it could.
“I don’t particularly like getting notices of violation,” she said. “If Seattle doesn’t want us … I think we need to think about where the business goes.”
She has less-favorable backup sites where the rig could be loaded, and those options are “very alive.” One is Port Angeles, although ships would have to ferry supplies to the rig. Another option is Dutch Harbor, Alaska, a less-sheltered harbor that poses a greater risk of storms.
Troubled 2012 season
Pickard is a 15-year Shell veteran whose previous work with the company included assignments in Nigeria and Australia. She took over Shell’s Arctic operations in June 2013, less than a year after the end of a troubled drilling season that prompted critics to question Shell’s ability to manage a complex Arctic exploration.
In 2012, one rig, the Kulluk, ended up aground off Kodiak Island. Shell contractor Noble Drilling U.S., which operated the Noble Discoverer, became the subject of a federal criminal investigation that resulted in a guilty plea to eight felony counts for environmental and maritime crimes and an agreement to pay $12.2 million in fines.
When she took on her new post, Pickard said, she did a lot of listening to contractors who are key to carrying out the exploration effort. Their complaints ranged from not having enough fresh food supplied to the Arctic vessels to concerns they were not sufficiently involved in the planning efforts.
“That one really resonated with me,” Pickard said. The result was what she described as a “radically different” relationship with contractors in what has become an “incredibly close partnership.”
She said the 2012 season suffered from a lack of planning for how the fleet would leave the Arctic when the drilling season ended, which is why the overwintering plan in Seattle is so important to her.
“I’m planning my next two years out; we’re not going to make the mistakes of the past,” she declared.
Coast Guard scrutiny
In the run-up to this year’s exploration, regulators continue to inspect Shell’s vessel and have found there is still more work to do.
When the Noble Discover was in Hawaii last month, the Coast Guard found fault with an oil separator that removes oil from water in the bilges. That equipment also did not work properly back in 2012.
That issue was addressed and the ship was allowed to continue to Everett, said Lt. Dana Warr, spokesman for Coast Guard sector Puget Sound.
The Coast Guard also boarded the Noble Discoverer and Polar Pioneer this week for a routine exam to ensure compliance with safety and security requirements.
Warr said the exam is unrelated to the problem found during the inspection in Hawaii.
Neither vessel received its Coast Guard certificate from this week’s exam, but Warr said it’s not uncommon to need multiple visits.
Pickard said the Coast Guard came up with a list of items “that have to be addressed” on the Polar Pioneer.
“This is great. I welcome all of these inspections,” Pickard said. “I can go on and kick the tires … but the more people who are looking at these things and testing things, the more robust the program will be.”
However, environmentalists who have been watching Shell since the company got its lease to drill in the Arctic are not convinced the vessels, or Shell, are up to the job.
“The track record of the Noble Discoverer is indicative of the track record of Shell and their contractors,” said Susan Murray, deputy vice president of the Pacific for the environmental group Oceana. “The Discoverer itself is just one bad actor in a play that the company had in its 2012 season, and it doesn’t inspire confidence in a 2015 season.”
Shell’s drill fleet is expected to arrive in the Chukchi in the second or third week of July. Once there, Pickard said, one uncertainty is how fast the rigs can excavate below the surface of the sea bottom to install special blowout preventers.
“Will it take a week or will it, like in 2012, take nearly 30 days — I don’t know,” she said.
Although scientists warn of the escalating risks of climate change from the carbon emissions generated by fossil-fuel consumption, Pickard is convinced that in 2025 to 2030, when Shell could potentially be producing crude from the Chukchi Sea, the world will still need oil.
She reaffirmed Shell’s support for putting a price on carbon, a step intended to help reflect the costs of climate change and spur development of alternative energy sources that do not generate those emissions.
“The world is going to need Arctic oil; otherwise we don’t supply energy,” she said. “To demonize us — to demonize the oil companies — I’m not sure that adds a lot of value.”
Murray of Oceana agrees there will be a transition period to stop using fossil fuels, but she doesn’t think the Arctic should be explored in the interim because its remoteness and harsh conditions increase the risks of environmental damage.
“So far there is no technology on the planet that can clean up spilled oil in the ice,” she said. “We are not going to stop using fossil fuels overnight, but we can be safer about the fossil fuel we are using.”