[ROCKMAN]

http://www.rigzone.com/news/oil_gas/a/1 ... ling_Plans

“ConocoPhillips in 1998 was awarded 98 exploration lease tracts in the Chukchi Sea Outer Continental Shelf. The company is Alaska's largest oil producer and is operator of the Kuparuk and Alpine fields. ConocoPhillips' leases will expire in 2019. As of year-end 2012, the company had invested $650 million net in its Chukchi Sea operations, including leases, seismic, biological studies and well planning”. IOW the corporate managers have a very big stake invested in going forward.

I suspect Shell Oil’s recent blunders in the Arctic also played into the decision. I’ve worked with many offshore engineers over the years and for the most part they’ve understood the difficulties and environmental risks operating in any harsh offshore environment. Especially true of the hands who actually work out on the water. But I’ve also sat in many meeting with office-bound “commandoes” who took rather glib positions. And there’s the real danger. If you didn’t catch that little bit of drama on the Macondo well: after his concerns were dismissed one of the rig managers said: “Well, guess that’s why we have blow-out preventers.” That wasn’t a spontaneous comment. We all have it in our back pockets ready for whenever we need to use it. It puts folks on notice that if the situation goes south you won’t hesitate to burn their ass. And everyone on the rig knows it. Why it’s always done in front of witnesses…as much a threat as a warning. I’ve seen it used many times and I’ve used it a time or two. It is seldom well received…it amounts to picking a serious fight. I’ve seen more than one hand run off after making it and once I had my contract threatened for saying it. My response was then don’t ask for my opinion in front of witnesses.

I have no inside knowledge of what wrong on Shell’s ops. But I have no trouble imagining a number of engineers having recommendations/warnings ignore by management. I suspect the pressure at the corporate level for results is much greater than many realize.

[Plantagenet]

The restrictions and delays imposed by the EPA and other federal regulators have essentially stopped offshore drilling in Alaska.

[seahorse3]

Plant, that conclusory statement had as much evidence supporting it as a belief in the devil.

[Plantagenet]

If you want to believe in the devil then go ahead, but please don't try to proselytize for your beliefs here.

------------

The Alaska lease sales off the north slope occurred in 1998 and 15 years later the leaseholders are still trying to get their permits from the EPA and other federal agencies. Shell did manage to drill on their leases in the Chukchi last summer, but the EPA delayed issuing the permits until the very end of the summer, so Shell couldn't start drilling until four months after they planned and they had to pull their drill ship out while winter storms were underway.

Clearly delays have occurred. Why not face facts?

[seahorse3]

Plant, you are proselytizing the "devil" aka Fed Gov't. It's easy to blame the government but equipment failures, safety, harsh working conditions maybe to blame.

$this->bbcode_second_pass_quote('', 'S')hell is dropping plans to drill in the Arctic waters off Alaska this year after a 2012 drilling season marred by equipment failures and ongoing investigations by the Coast Guard, Interior Department and the Department of Justice.

[seahorse3]

Same equipment problems for Shell in 2013.

$this->bbcode_second_pass_quote('', 'S')hell has suspended drilling operations in Arctic waters for 2013 after a series of mechanical failures. However, the oil giant states that it remains committed to exploration in the region.

In what is a huge setback for the company’s Arctic plans, the firm has abandoned plans to drill off the north coast of Alaska this year, after its Kulluk oil drilling ship ran aground during severe storms last month.

Anchorage – the name of the company’s project aimed at providing the US with a new source of domestic oil – states that its pause in drilling activities is “to prepare equipment and plans for a resumption of activity at a later stage”.

“We’ve made progress in Alaska, but this is a long-term programme that we are pursuing in a safe and measured way”, said Shell president Marvin Odum.

“Our decision to pause in 2013 will give us time to ensure the readiness of all our equipment and people following the drilling season in 2012.”

[Plantagenet]

$this->bbcode_second_pass_quote('seahorse3', 'P')lant, you are proselytizing the "devil"

[seahorse3]

You win Plant. You have beat me.

"Don’t argue with idiots because they will drag you down to their level and then beat you with experience"

[Plantagenet]

$this->bbcode_second_pass_quote('seahorse3', 'Y')ou win Plant. You have beat me.

[Econ101]

Shell is announcing a breakthrough in the technical challenges of their arctic development of tapping into the tremendous oil resources in the Chukchi Sea. I suppose this is going to be called unconventional, either way, this is going to unleash tremedous new supplies that are going to fill up the Alaska Pipeline.

This is an excerpt from an investors blog:

$this->bbcode_second_pass_quote('', 'T')hey figured out the key to Arctic oil drilling.

But it took a long time.

The suits over at Shell (NYSE: RDS-A) have been in the hot seat over the past year or so after burning through more than $5 billion to tap Arctic oil reservoirs in the Chukchi Sea.

As I've discussed in these pages before, the risk-versus-reward scenario for Shell's Chukchi Sea adventure never made much sense. The independent oil producer simply had too little experience in Arctic oil production and too many mishaps last year (including a damaged containment dome that was crushed by the weight of unforgiving Arctic waters) to make it a particularly profitable venture...

Moreover, after two of President Obama's advisors called for a permanent halt to oil exploration in the Arctic, long-time investors got skittish. Peak oil politics at work.

Truth is — and I've said this time and time again — Shell would've been better off working with the Russians to tap Arctic oil treasures, as producers have more experience in those climates and the regulatory environment is less stringent.

Certainly this is what Exxon (NYSE: XOM) did a couple of months ago after signing a deal with Russian petroleum giant Rosneft (PINK SHEETS: RNFTF). Back in February, the two companies approved a deal that resulted in some easy money for Russia and an additional 234,000 square miles of oil exploration for Exxon in the Russian Arctic.

It looks like Shell is now heading down the same path...

[ROCKMAN]

And more disappointing news...for some:

Reuters – Norway's Statoil drilled a third disappointing well near its Johan Castberg find in the Arctic Barents Sea, casting further doubt on the $15.5 billion project that is already on hold because of high costs. Statoil said it found gas in a well near Castberg, a setback for the oil company as it looks for more oil as part of an ambitious exploration campaign aimed at securing more resources and improving the project's profitability. "The exploration programme around the Johan Castberg field has been vital in providing area knowledge but so far not delivered expected oil volumes," Statoil said in a statement. "Unfortunately, out of the four wells drilled to date only one has resulted in an oil discovery."

Statoil has one more exploration well planned for the area, which it plans to start drilling immediately. Statoil found up to 600 million barrels of oil equivalent at Castberg in 2011 and 2012 and had already selected a concept for development before stopping the project last year because of a tax increase. It argued that the tax, currently under review by the new centre-right government that came into power in October, reduced the financial viability of the project. Its operating costs have also become an issue as they have risen by 7 percent a year on average from 2005 to 2012. Statoil owns 50 percent of Castberg, Italy's Eni has 30 percent, and Norwegian state-holding firm Petoro owns the rest.

- See more at: http://www.rigzone.com/news/oil_gas/a/1 ... 99cWW.dpuf

[ROCKMAN]

Pstarr - As I recently elsewhere on the site companies routinely either release offshore leases or from them out to other operators. It's a normal aspect of the process of going from a general exploration strategy to specify drilling recommendation. I gave my company's recent experience: we did a preliminary analysis and won three GOM lease blocks. After spending $millions on seismic data to allowed detailed evaluation after we were awarded this 15,000 acres we concluded the risk to reward dynamic was insufficient and we dropped all three leases. Dropping those leases was not an indication of waning interest in drilling in the GOM. We just lost interest in those prospects. IOW these folks are assigning a causation in a matter in which they apparently don't understand. I have no doubt all the companies leasing in the Arctic today have the same appreciation of the difficulty in operating in that environment as they did before Shell's problem.

[Keith_McClary]

$this->bbcode_second_pass_quote('Plantagenet', 'D')on't be silly. You the person who keeps talking about the devil, not me.

[Keith_McClary]

$this->bbcode_second_pass_quote('pstarr', 'I') imagine that is how Plant sees the President of the United States.

I know. It ain't right.

[Subjectivist]

$this->bbcode_second_pass_quote('Keith_McClary', '')$this->bbcode_second_pass_quote('Plantagenet', 'D')on't be silly. You the person who keeps talking about the devil, not me.