1. Update on Alaska
OCS Development
Ninth Annual Comprehensive Conference
on Energy in Alaska
BRADFORD G. KEITHLEY
PRESIDENT AND PRINCIPAL,
KEITHLEY CONSULTING, LLC
DECEMBER 5, 2013
3. Alaska OCS: Setting the
stage
“One of the world’s largest
untapped resources”
132 Tcf of natural gas, 27 billion
bbls oil
ISER: 68,600 jobs during
production, $63 billion in Alaska
payroll
4. Setting the stage:
potential knock on effects
Development of NPRA
Pipeline opens up opportunity for
development of regions currently deemed
non-commercial
Extending life of TAPS
Replacement oil as onshore sources decline
A key to maintaining economics of smaller
developments on state lands
Replacement source of state revenue
But would require significant Federal legislation
5. Recent history
Four significant players in past five years
Chukchi: Shell, ConocoPhillips, Statoil
Beaufort: Shell, BP (Liberty)
Three (and a half) gradually have put plans on
hold
Statoil: Chukchi (2013)
ConocoPhillips: Chukchi (2013)
BP: Liberty (2012)
Shell: Beaufort (2013)
Reasons
“Do-ability”: Cost, permitting, technology
6. Current status
Shell 2014 focus on Chukchi:
Dec 4 (Reuters) - Royal Dutch Shell Plc will return to
Alaskan offshore drilling next July and will deploy an
upgraded drillship in the Chukchi Sea, while keeping a
newly contracted backup drillship ready if needed,
according to plans released on Wednesday … Drilling
at Shell's Burger prospect is set to be carried out from
July through October, according to Shell's Integrated
Operating Plan.
Subject to …
BOEM approval of Exploration Plan (filed Nov. 6)
Status: BOE has asked Shell to respond to additional
questions
7. Other factors affecting
current status
Additional BOEM questions (Fuelfix, Dec. 4)
“Regulators at [BOEM] have asked Shell to provide
dozens of additional documents and other
information in connection with its proposed drilling
blueprint for the Chukchi Sea”
Reduced frequency of tests on blowout preventer,
capabilities of drillship, modifications being made for
extreme weather conditions
Shell’s “Integrated operations plan” (filed Nov. 26)
In response to DOI questions raised as a result of 2012
drilling activities
Focused on Shell’s control over operations
8. DOI “Six Keys to Arctic
Exploration” (Nov. 2013)
“Safety and environmental performance”
“Strong, fair and independent oversight”
“Preparedness” (“dealing with the worst
case”)
“Respect for local communities”
“Good governmental coordination and
efficiency in the permitting process”
“Strategic vision & integrated Arctic
management”
9. Other ongoing issues …
“Interagency Working Group on Coordination of Domestic
Energy Development and Permitting in Alaska”
Formed mid-2011 in response to approval gridlock related to CD-5
resulting from multi-agency review
Coast Guard Arctic deployment
Evolving plans and funding
BSEE/Coast Guard MOU (Nov 2012)
Arctic Council
“Agreement on Cooperation on Marine Oil Pollution Preparedness
and Response in the Arctic” (May 2013)
Canadian and US Chairmanships over the next four years
Sleepers (and maybe asleep)
Potential DOI (BOEM/BSEE) rulemaking regulating Alaska OCS
exploration (not mentioned in November 2013 RDC speech, but in an
interview said “first quarter 2014”)
“Marine Spatial Planning” (NOAA)
10. Elsewhere in the Arctic …
Russia
Norway
Greenland
Canada
Iceland
11. Going forward …
Waiting on “proof of concept”
Can they be recovered economically
Are there recoverable hydrocarbons
In Alaska, Shell now being looked at to deliver “proof of
concept”
Is it gas or oil
Gas less valuable than oil, already many LNG projects
Competition for investment dollars
Major lease purchases occurred in 2008, just as “shale
gale” was starting to emerge
A number of producers are continuing to refocus attention
on shale opportunities