Shell faces multiple hurdles as it prepares to spearhead a new wave of exploration in the remote and inhospitable US Arctic. Rod James talks to Ove Tobias Gudmestad of the University of Stavanger about the technological challenges of Arctic drilling, the crew change and how good managerial attitudes are everything.
In the first week of August, Shell began final preparations for drilling in the Arctic Ocean. The supermajor is presenting its oil spill containment equipment to the Environmental Protection Agency, which will check to see if it abides by US air pollution laws. Approval is likely to have been granted by the time this magazine goes to press, and Shell will spearhead a new wave of exploration in the inhospitable US Arctic.
For Shell, approval represents the end of a long and difficult few years. At the end of July, the company announced that it was to drill only two wells in the Chukchi and Beaufort seas as opposed to the five originally planned. This was attributed to delays in refurbishing and gaining certification for a containment barge, which must be on location before any drilling can begin. Shell also faces a lawsuit filed by an alliance of environmental organisations, which questions the efficacy of the company’s emergency response plans.
Even when these hurdles are cleared, the company’s scope in the region is limited. Shell’s exploration permits call for a halt to operations in the Chukchi Sea on 24 September, with Beaufort Sea drilling mandated to cease on 31 October. Operations must also come to a halt during whale migration season. It is testament to the value of the region that such tight parameters and the need for $4 billion of investment have failed to act as a deterrent.
The US Geological Survey estimates that 13% of the world’s undiscovered oil and 30% of its undiscovered gas can be found in the Arctic. To get to it, companies have to deal with hurricane-force winds, thick pack ice and average winter temperatures of -40°C. They are also faced with a pristine environment, with too homogenous an ecosystem to deal with a major oil spill. In the view of Ove Tobias Gudmestad, professor of marine technology at the University of Stavanger, Norway, the preponderance of ‘unknown unknown’ scenarios means that no plan can be foolproof.
With more than 30 years’ research and development experience with Statoil, Gudmestad is well placed to comment. The Norwegian national oil company’s Snøhvit natural gas fields and adjacent LNG terminal demonstrated that offshore installations could be safely operated in the far northern Barents Sea. Still, more northerly seas of the Arctic Ocean are a very different proposition, particularly with regard to ice coverage.
"For areas where there is normally no ice, like the south-western Barents Sea, occasional ice could still destroy anchored FPSOs," Gudmestad explains. "In those cases, it is necessary to consider whether such vessels should be disconnectable to avoid a potential catastrophe. In areas with drifting ice, particularly multiyear ice floes and smaller icebergs or growlers, any vessel might be destroyed. These drifts often change direction with the tide and it is a huge challenge to ensure that a vessel can follow these changes."
As the ice pack melts, the size of these ice drifts might well increase. Consequently, effective disconnection mechanisms are vital to allow vessels to flow with the drift if the ice proves unmanageable. Extensive trace heating piping will be needed to protect exposed equipment and special consideration must be given to ice accumulating on vessel surfaces.
"Furthermore, emergency response and evacuation are extremely difficult in the case of icing or sea ice," Gudmestad expands. "Many locations are a long way from shore and the unstable Arctic weather hinders the efficiency of helicopters. Standby vessels and helicopter rescue bases may be required midway between shore bases, and the oil and gas fields."
Subsea technology and the question of accountability
Precise details of Shell’s technology and strategy are unclear. In case of a spill, their oil spill response vessel is on-site to provide immediate recovery and storage. An onshore oil tanker is also on permanent standby, ready to provide backup within 24 hours.
We will hopefully never get to gauge the effectiveness of this system, but Gudmestad has identified a number of other areas where he believes more R&D resources are needed.
Although much work is being done to understand multiphase pipeline flow, water separation technology, which can prevent the formation of hydrates in oil pipelines, is in its relative infancy. With transportation a struggle, subsea components will have to be modularised and operated using remotely operated vehicles. Statoil, in particular, has made impressive progress on this front, although these technologies will have to work perfectly if they are to be used in the far north.
"Halliburton’s CEO was recently in Norway and called for more technology barriers to deepwater exploration projects," Gudmestad explains. "He is probably correct, and this is more the case in the Arctic than elsewhere. The most important question is whether oil and gas executives will take the time to implement the barriers. Today, the attitude to cautious work seems to be, ‘find a new job if you are here to ask questions’." Gudmestad is more optimistic with respect to companies such as Shell, which has the attitude: "if you ask questions, please join us to solve them".
This uncertainty is compounded by the question of accountability, or a lack thereof. The relationship between the oil company and contractor is a tricky one, as recriminations in the wake of the Deepwater Horizon disaster proved. If things do go wrong, how will blame be apportioned? And what power does the government have to monitor operations in the Arctic and intervene if necessary?
The likely desire to speed up drilling, given the size of the available window, could have a considerable negative impact made even more severe by a lack of knowledge.
Bridging the generation gap
The great crew change is well documented. About half of the oil and gas industry’s employees are scheduled to retire in the next decade with peak age reaching 60 this year. A study last year by Schlumberger Business Consulting estimated that, by 2014, around 17,000 petroleum technicians will have entered the job market, considerably fewer than the 22,000 that will be leaving.
Another survey, this time by the American Association of Petroleum Geologists, concluded that mentoring new staff is a key element to reducing the impact of this demographic change, with 77% of respondents claiming to be actively engaged.
"Will the oil companies implement procedures to ensure that corners are not cut to speed up drilling? Gudmestad ruminates. "Will the alarms be on, even if this causes disruption on the drilling rig when there are gas leakages? Furthermore, is experience being carried forward? An attitude where lessons are transferred to new employees is necessary. Can a company still claim to have experience after an exodus of experienced workers due to restructuring or early retirement?"
As well as depth, the knowledge base of companies operating in the Arctic could be broadened. The local populous has a much deeper understanding of the environment and a better memory of previous drilling efforts than most oil and gas engineers. Gudmestad believes that relationships need to be built between oil and gas producers, universities and local groups if the best outcomes are to be realised.
"Is traditional knowledge used?" he wonders. "The natives know about past incidents and should be involved in defining databases and design scenarios. And finally, do universities provide the basic knowledge that graduates need?
"Cooperation is required to define the necessary curriculum for future exploration and production engineers who will participate in Arctic development and operations," he adds.
No matter how advanced exploration and recovery technology becomes, Arctic drilling will always be a contentious issue. What is clear is that the successful transfer of knowledge to a new generation of petrochemical engineers is an important aspect of reducing risk.
This article was first published in our sister publication World Expro.