Shell could abandon Arctic after this season


#1

Suddenly Shell is saying there is doubt in the viability of their Chukchi leases…is this why we have heard nothing all season from them? That they are only finding gas or dry holes? As one who saw nothing but massive potential in the Alaskan Arctic, I hope that this is not true. Much as I think Shell is a huge clown circus, I want them to find a huge field. Is this interview setting the stage for the opposite?

[B]Shell could abandon Arctic after this season[/B]

By Ashley Herriman 9/18/2015

If Royal Dutch Shell does not discover oil at its drill sites in Alaska’s Chukchi Sea this season, the company might abandon the project, CEO Ben van Beurden told the BBC’s Kamal Ahmed.

“Our plan for the Arctic is to find out whether there is any oil in the Chukchi Sea,” van Beurden said. “We are in the middle of that drilling campaign and we have to see at the end of the season whether we get into the reservoir. If these results are conclusively no, then it will probably be the end of the road for our Alaska adventure.”

However, if Shell does meet with preliminary success, van Beurden reiterated that the road to production would be a long one and that Shell would not make a conclusive investment decision until at least 2020.

“In terms of finally sanctioning a project, I cannot see that happening this side of 2020,” van Beurden told the BBC. "And I think by the time we are in production it will be nearer 2030. So these are long term projects that we are developing.”

Shell’s road to Arctic exploration has been a rough one — progress was delayed earlier this summer when a key support vessel required repairs, and a similar attempt in 2012 saw one of the company’s drilling rigs grounded in rough weather. In August, Shell was granted permission to modify its Application for Permit to Drill into potential oil-bearing zones in the well at Burger J. It remains limited to the top section of the well at Burger V. Shell has Transocean’s high-specification semisubmersible rig Polar Pioneer under contract in the Chukchi Sea for $624,000 a day until October.

In the wide-ranging BBC interview, van Beurden also discussed energy supply and demand. Read the full story on BBC.com.


#2

I’m sure the oil price is 97% of the reason they are abandoning the Arctic. No why they can earn money on this short or long term.


#3

Looks like what is being said is that if they do not find oil it’s a no-go and if they do find oil it’s a maybe.


#4

What is up with a $624,000 day rate for an anchored semi rig in this market?

The Obama administration has really screwed Shell by not letting both rigs drill at the same time reducing the amount of exploration drilling by 50 percent. Shell must be getting sick of this nonsense.

Maybe they have had a dry hole. Although I do not see how a frontier area like this can be fairly tested with less that a couple dozen holes. They drilled for a long time in the North Sea before they found anything.


#5

Shell screwed themselves by telling the govt what they could do, then putting relics to work up there trying to meet the high specs Shell said would happen. It makes no sense they cannot work both rigs simultaneously, and who on earth thought it was a good idea to charter an anchored semi for that high a day rate must have had some connection with Frontier. Would be good if sensibility prevailed up there some day. Like c.captain, in spite of all their setbacks, I would like to see them find something worth pursuing for many years to come.


#6

[QUOTE=The Commodore;169288]Shell screwed themselves by telling the govt what they could do, then putting relics to work up there trying to meet the high specs Shell said would happen. It makes no sense they cannot work both rigs simultaneously, and who on earth thought it was a good idea to charter an anchored semi for that high a day rate must have had some connection with Frontier. Would be good if sensibility prevailed up there some day. Like c.captain, in spite of all their setbacks, I would like to see them find something worth pursuing for many years to come.[/QUOTE]

which makes you wonder: given that due to this regulation of the administration they have only the Polar Pioneer drilling and the Discoverer idle, is Shell really going to (have to) pay a full dayrate for the latter to their friends at Noble drilling??


#7

Doesn’t Shell actually own the DISCO and Noble is just the operator? Wasn’t that also the deal on KULLUK?

Clearly, Obama is trying to make Arctic drilling impractical and cost ineffective without outright banning it. It appears that he has been successful.


#8

[QUOTE=tugsailor;169308]Doesn’t Shell actually own the DISCO and Noble is just the operator? Wasn’t that also the deal on KULLUK?

Clearly, Obama is trying to make Arctic drilling impractical and cost ineffective without outright banning it. It appears that he has been successful.[/QUOTE]

Nah, that was only the deal with the Kulluk. The Discoverer still belongs to Noble - http://www.noblecorp.com/rig-fleet/noble-discoverer. Maybe they’ll get a discount.


#9

[QUOTE=Kraken;169239]I’m sure the oil price is 97% of the reason they are abandoning the Arctic. [/QUOTE]

here it all lies. Shell knows full well that in the current supply/demand market for crude a that there is no way in hell they could ever hope to produce any crude they might find in the Chukchi and I believe all this year’s activity was less about what they find up there than to satisfy the requirement that they drill on their leases to keep them. I believe that deadline was looming very soon hence why they went north this year. Now that they satisfied that demand, they can keep those leases for the future but end the massive hemorrhage of cash continuing to drill year after year from here on out to try to find oil they can do nothing with. I was on record as saying that they weren’t going north this year at all but I was wrong mainly because the BOEM did not grant them the extensions on drilling they requested. Regardless of what they find up there this year, they will not go back next. Once everyone returns in a month, the DISCO will go to scrap and the AIVIQ will go back to propping up a dock somewhere in Puget Sound.


#10

The current price of oil has little to with future production that probably would not start for at least 10 years. “Ever” is a long long time and beyond predictability.

Shell should not have gone north in 2012 without the very biggest and best new Arctic ready rigs, and oil spill containment and clean up equipment, with all the bugs worked out. Shell should not have foolishly encouraged and allowed Chouest to put KULLUK on the rocks.

Obama was determined to prevent Arctic drilling through cost prohibitive and time wasting restrictions rather than an outright ban.

It makes no sense for any company to try to drill for oil in the US Arctic unless the government is fully supportive.

In 20 or 30 years when oil is over $300 a barrel, gasoline is being rationed, and most of the Eco-freaks have frozen to death and in the dark, there will be a new government supported effort to develop Arctic oil.


#11

[QUOTE=tugsailor;169329]The current price of oil has little to with future production that probably would not start for at least 10 years. “Ever” is a long long time and beyond predictability. [/QUOTE]

but cash flow and spending is today and not in some distant future. Shareholders must be placated with dividends which means cutting projects which cannot hope to produce cash in a decade or more. Any oil found in the Chukchi this years will still be there in 20years when the world market for oil might look completely different than today and as long as Shell has that oil in “their” bank, they will be first in line to tap it. Now that they have drilled on their leases in the Chukchi, they should have that oil locked in for some time to come. Anyone know once a lease is drilled on, how long the rights to that lease extend? Is it 20 years?

.


#12

[QUOTE=c.captain;169330]Anyone know once a lease is drilled on, how long the rights to that lease extend?[/QUOTE]

Senator Murkowski, one of Shell’s big supporters, embedded some stuff on leases in a broader bill not so long ago.

Here’s more details: http://fuelfix.com/blog/2015/07/27/senate-bill-would-give-oil-companies-a-decade-more-to-drill-in-arctic/

Still, even if that would all go ahead, I agree with some of you guys that trying to go back north next year wouldn’t make much sense unless they [B]finally[/B] show up with a proper state of the art drilling rig (rather than decade old rusty things). They’re paying too much money for 17x upgraded stuff (like the Disco) and are making fools of themselves.


#13

Are the any suitable rigs available?


#14

[QUOTE=Tups;169339]Are the any suitable rigs available?[/QUOTE]

of course there are or at least rigs that can be made suitable. The two BULLY drillships have heavy ice class hulls although each would require a good couple of hundred million or more to make Arctic ready and I believe the GLOBETROTTER pair is similar. One thing that shocked me about the BULLY ships was that there was no provision made in the design for a turret mooring for them which would require the anchorspread to continually shifted to accommodate ice and weather. Shows the infinite knowledge of Shell when they signed the contract with Frontier to build them. You would think a company like Shell would have thought of something as basic as that or even having a drilling tower low enough to make it under the bridges over the Panama Canal…PHARSICAL PHUCKING PHOOLS!


#15

[QUOTE=c.captain;169327]here it all lies. Shell knows full well that in the current supply/demand market for crude a that there is no way in hell they could ever hope to produce any crude they might find in the Chukchi and I believe all this year’s activity was less about what they find up there than to satisfy the requirement that they drill on their leases to keep them. I believe that deadline was looming very soon hence why they went north this year. Now that they satisfied that demand, they can keep those leases for the future but end the massive hemorrhage of cash continuing to drill year after year from here on out to try to find oil they can do nothing with. I was on record as saying that they weren’t going north this year at all but I was wrong mainly because the BOEM did not grant them the extensions on drilling they requested. Regardless of what they find up there this year, they will not go back next. Once everyone returns in a month, the DISCO will go to scrap and the AIVIQ will go back to propping up a dock somewhere in Puget Sound.[/QUOTE]

Wonder what the possibility of the AIVIQ ending up in the USCG’s hands? I don’t know much about ice breakers but the US is looking into acquiring a bigger fleet, would buying this one do any good or make any sense? Or does ECO trying swindle it into the program with the other 2 ice breakers they operate?


#16

[QUOTE=Saltine;169346]Wonder what the possibility of the AIVIQ ending up in the USCG’s hands? I don’t know much about ice breakers but the US is looking into acquiring a bigger fleet, would buying this one do any good or make any sense? Or does ECO trying swindle it into the program with the other 2 ice breakers they operate?[/QUOTE]

I was thinking along the same lines, not specifically about the [I]Aiviq [/I]but in general. I see that the Canadians reached the N. Pole with two ships this year, one was the [I]Terry Fox [/I] which was originally built and owned by Shell but was later sold to the Canadian Coast Guard. One thing is that the Canadian Coast Guard is civilian so it might be easier for them to operate a vessel built to be operated commercially then it would be for the USCG.


#17

[QUOTE=Kennebec Captain;169350]I was thinking along the same lines, not specifically about the [I]Aiviq [/I]but in general. I see that the Canadians reached the N. Pole with two ships this year, one was the [I]Terry Fox [/I] which was originally built and owned by Shell but was later sold to the Canadian Coast Guard. One thing is that the Canadian Coast Guard is civilian so it might be easier for them to operate a vessel built to be operated commercially then it would be for the USCG.[/QUOTE]

Indeed…expect the USCG to howl like stuck swine the moment they are told they have to operate a non-MilSpec vessel. However you know that don Vito Chouest owns many congresspeople in Washingtoon so it can be seriously expected that he would try if he had to although I cannot imagine that the contract he has with Shell for the AIVIQ would give Shell much room to try to get out of the deal short of paying Gary a large lumpsum outright which the Don would never take unless he was guaranteed a deal to use or sell the AIVIQ elsewhere. Blame Shell and not Chouest for the Big Blue Behemoth…they should have ensured the ship was designed to be useful for more than just working in the Chukchi such as doing subsea work in the GoM. They are stuck with the Great Leviathan for another 17 years and will be paying the Godfather a very great deal of treasure to the man for years to come whether where is work for it or no. IMBECILES!

[QUOTE=Saltine;169346]Wonder what the possibility of the AIVIQ ending up in the USCG’s hands? I don’t know much about ice breakers but the US is looking into acquiring a bigger fleet, would buying this one do any good or make any sense? Or does ECO trying swindle it into the program with the other 2 ice breakers they operate?[/QUOTE]

I have heard that NSF’s funding for the Antarctic is seriously reduced and the two ECO vessels down there are only working a fraction of the year. Anyone know the real situation down south?

.


#18

A boat like the Aiviq would never work with the CG. Its built far too ergonomic for a crew of 100 blue suits to effectively operate. Can you imagine 10 people on that sweet bridge yelling at each other on sound-powered phones???


#19

[QUOTE=commtuna;169370]A boat like the Aiviq would never work with the CG. Its built far too ergonomic for a crew of 100 blue suits to effectively operate. Can you imagine 10 people on that sweet bridge yelling at each other on sound-powered phones???[/QUOTE]

That’s probably true, but from reading the Coast Guard’s report on the grounding of the Kulluk it didn’t seem like the CG was very impressed with ECO either.


#20

I agree. Even on the CG side, cutter CO’s and XO’s up here have prior Alaska experience. Its pretty much an unspoken rule nowadays. And for good reason.