Arctic energy ambitions are becoming more and more unattainable

Maritime News
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looks like suddenly everyone is realizing there is no way energy can be produced from the Arctic offshore for anywhere close to profitable but just like that, the Atlantic starts to look like a much better prospect

[B]U.S. Seen Limiting Oil Drilling in Arctic, May Open Atlantic[/B]

By Bloomberg On January 26, 2015

By Mark Drajem and Jim Snyder

(Bloomberg) — The U.S. Interior Department will lay a framework as soon as Tuesday for oil exploration in the nation’s coastal waters in a five-year plan that is expected to withdraw areas off Alaska while possibly adding parts of the Atlantic.

Republican Lisa Murkowski said the head of the offshore energy office told her the agency will place areas of the energy-rich U.S. Arctic off limits. Those areas had been previously deferred from new leasing. Current leases in the Arctic, such as those held by Royal Dutch Shell Plc, won’t be affected.

“Maybe they’ve changed their minds after listening to the outrage from us. We’ll see,” Murkowski, the chairman of the Senate Energy and Natural Resources Committee, told reporters Monday.

Jessica Kershaw, an Interior Department spokeswoman, didn’t respond to an e-mail asking about Murkowski’s comments.

The agency’s proposed plan will control leasing in the Outer Continental Shelf, such as the Gulf of Mexico and Arctic Ocean. The plan may open some areas in the Atlantic for the first time, especially off Virginia, North Carolina and South Carolina, where governors and many lawmakers support drilling.

“We have the sense that the Atlantic would be in there, and we’ll have to fight to get it out,” said Jacqueline Savitz, vice president of the environmental group Oceana. “If it’s in the plan, you can kiss your beaches goodbye.”

She said it’s not clear what parts of the Atlantic would be included.

Budget Gap

The administration of President Barack Obama provoked a furious backlash from Alaska’s political leaders after first pushing Congress to declare the disputed Arctic National Wildlife Refuge as a wilderness area, then disclosing plans to curtail future Arctic drilling.

Alaska’s leaders are struggling with a budget gap created by a plunge in state oil production and the price of oil. Governor Bill Walker said he is considering “aggressive options” against Interior’s proposal.

Walker said Interior won’t withdraw the leases held by Shell, which had mishaps in 2012 while trying to explore in the Beaufort and Chukchi seas. Both Shell and ConocoPhillips put their exploration plans in those seas on hold in 2014. They must decide soon whether to try again this year.

The announcement would come as a decline in global oil prices has drillers cutting back on production. West Texas Intermediate for March delivery fell 44 cents to close at $45.15 a barrel on the New York Mercantile Exchange. It was the lowest settlement since March 11, 2009.

Oil rigs have dropped by an unprecedented 258 in seven weeks, threatening to end the surge in domestic oil production that has turned the U.S. into the world’s largest fuel exporter.

Obama announced Dec. 16 he was blocking the leasing parts of Bristol Bay, Alaska, for oil and gas exploration and production.

now way in hell with shale oil and gas dominating the market that anyone wants to waste anymore money on the Arctic today. Maybe 15 years from now it will look attractive again but not for a long time. I expect Shell to take a massive writedown on their entire Arctic program within the next six months.

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We all saw how quickly the price of oil dropped last year. Once the current disturbance in the world politics ends and/or the sheikhs realize they can’t afford their old lifestyle with this price level, what will prevent it from jumping back to what it used to be or even higher, making Arctic offshore production profitable again?

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[QUOTE=Tups;152975]We all saw how quickly the price of oil dropped last year. Once the current disturbance in the world politics ends and/or the sheikhs realize they can’t afford their old lifestyle with this price level, what will prevent it from jumping back to what it used to be or even higher, making Arctic offshore production profitable again?[/QUOTE]

but even with oil at $150, I seriously doubt anyone would be able to make a profit producing oil from the high Arctic. The costs to put in production there are astronomical beyond all other production costs and with a market which now is contending with shale oil abundance, how could any major spend so much even to explore up there? Remember, stated reserves on a balance sheet only count if they can be produced.

where is Shell today on their permitting for 2015? More importantly, where is Shell today in their request for the extgension on their leases from the Department of the Interior? Is Shell really going to mobilize a fleet to Dutch Harbor without everything in hand? As rich as they are, they aren’t as rich as they were in 2012 and there are shareholders who want to see E&P spending reigned in. Dropping another billion for a highly politically risky and fiscally dubious venture in today’s price environment makes no sense whatsoever.

I say the DoI grants the extension and Shell quietly puts the Chukchi and Beaufort Seas on ice (pun intended) until some very distant day when everything makes sense to go back. I see 10 years till we see that day. What the FUCK they do with the AIVIQ in that time remains the only big issue. Sell it to the USCG to be their newest icebreaker perhaps or convert it to a US flagged polar cruiseship?

.

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this is Reuters’ article…

[B]U.S. proposes allowing oil, gas drilling off Atlantic Coast[/B]

By Timothy Gardner and Patrick Rucker

WASHINGTON Tue Jan 27, 2015 2:36pm EST

(Reuters) - The Obama administration on Tuesday proposed allowing for the first time oil and gas exploration in a wide swath of U.S. waters off the Atlantic Coast.

The 2017 to 2022 drilling plan begins a process that could take many years before waters off the coasts of Virginia, North Carolina, South Carolina or Georgia are cleared for drilling.

Interior Secretary Sally Jewell said the plan was “a balanced proposal” to make available oil and gas fields believed to be recoverable “while protecting areas that are simply too special to develop.”

It expands on the last five-year plan initially issued in 2010 that allowed drilling off Virginia. The administration canceled a lease sale there after BP Plc’s (BP.L) deadly explosion and oil spill in the Gulf of Mexico that year.

The plan includes a potential lease sale in the Atlantic around 2021 but it could be withdrawn if scientists discover that the area is too fragile.

“We need more information,” Jewell said about the energy potential of the Atlantic and whether drilling there would interfere with fishing, defense and development of wind power. U.S. data on the Atlantic is 30 years old, she told reporters on a conference call.

The plan for the lease sale in the Atlantic includes a 50-mile (80 km) coastal buffer to protect those other uses.

In addition, President Barack Obama took parts of Alaska’s Beaufort and Chukchi Seas off limits from consideration of future oil and gas leasing to protect the areas for Native Americans hunting and fishing.

That came in addition to Obama’s call on Congress on Sunday to expand protection of Alaska’s Arctic wildlife refuge, including an area on the Coastal Plain believed to be rich in oil and gas.

The five-year plan did propose one lease sale each in the Chukchi and Beaufort seas and the Cook Inlet, as well as 10 lease sales in the Gulf of Mexico. But like the Atlantic sales, those could be canceled at a later date.

Senator Lisa Murkowski, an Alaska Republican and the chair of her chamber’s energy committee, slammed the five-year plan, saying the Obama administration is “determined to shut down oil and gas production in Alaska’s federal areas.”

Many environmentalists criticized the opening of the Atlantic, saying an oil spill could wreck coasts of states such as Delaware and Maryland that oppose drilling.

“Oil spills don’t recognize state boundaries,” said Claire Douglass, a campaign director at Oceana.

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I love how everyone who is against drilling says “good buy beaches” like spills happen daily.

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[QUOTE=KrustySalt;152998]I love how everyone who is against drilling says “good buy beaches” like spills happen daily.[/QUOTE]

they are the same blithering misguided fools who are certain that Joe Hazelwood was drunk off his ass and personally drove the EXXON VALDEZ atop Bligh Reef!

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[QUOTE=c.captain;152976]What the FUCK they do with the AIVIQ in that time remains the only big issue. Sell it to the USCG to be their newest icebreaker perhaps or convert it to a US flagged polar cruiseship?[/QUOTE]

That’s an interesting question. With the third most capable icebreaker under the American flag (after USCGC Polar Star and USCGC Healy), they could in theory offer icebreaking services to the Coast Guard for example in the Great Lakes area.

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[QUOTE=c.captain;152976] …

where is Shell today on their permitting for 2015? More importantly, where is Shell today in their request for the extgension on their leases from the Department of the Interior? Is Shell really going to mobilize a fleet to Dutch Harbor without everything in hand? As rich as they are, they aren’t as rich as they were in 2012 and there are shareholders who want to see E&P spending reigned in. Dropping another billion for a highly politically risky and fiscally dubious venture in today’s price environment makes no sense whatsoever.

I say the DoI grants the extension and Shell quietly puts the Chukchi and Beaufort Seas on ice (pun intended) until some very distant day when everything makes sense to go back. I see 10 years till we see that day. What the FUCK they do with the AIVIQ in that time remains the only big issue. Sell it to the USCG to be their newest icebreaker perhaps or convert it to a US flagged polar cruiseship?

.[/QUOTE]

this where they are today: Shell aims to restart Arctic drilling this year -CEO

Still no guarantee (yet) they will be up north but they seem to be up for it and preparing the kit.

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[QUOTE=Drill Bill;153070]this where they are today: Shell aims to restart Arctic drilling this year -CEO

Still no guarantee (yet) they will be up north but they seem to be up for it and preparing the kit.[/QUOTE]

Just remember that beyond the government and environmentalists there are shareholders to appease. Talk is cheap and I can’t imagine his making this statement would be a big hit with shareholders who want to see E&P spending cut way back at Shell. I still say if they get an extension on their leases, they put the kabosh on the whole effort until after prices recover. If they don’t get an extension, then I guess they might feel forced to go back to keep the leases for the future even if any oil found can never be produced profitably.

I expect they will get the extension but maybe not until after all the equipment is mobilized costing Shell plenty for nothing.

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[QUOTE=c.captain;153073]

I expect they will get the extension but maybe not until after all the equipment is mobilized costing Shell plenty for nothing.[/QUOTE]

And hopefully put some money in the pockets of some Foss or Crowley or Western employees in the process, someone’s going to be towing all that gear up there right?

Is it too much to assume that they won’t be relying on Chouest to do anything important for them?

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[QUOTE=50thState;153079]Is it too much to assume that they won’t be relying on Chouest to do anything important for them?[/QUOTE]

they certainly ain’t gonna be towing the KULLUK! In fact, since tending the KULLUK was the intended purpose of the AIVIQ what the FUCK is it now supposed to do for Shell? My GOD the power that Gary Chouest must wield in the offshore that Shell didn’t tell ECO to go fuck themselves and their Huge Blue Elephant after the idiocy and hubris of Chouest’s people cost Shell a valuable rig!

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[QUOTE=50thState;153079]And hopefully put some money in the pockets of some Foss or Crowley or Western employees in the process, someone’s going to be towing all that gear up there right?

Is it too much to assume that they won’t be relying on Chouest to do anything important for them?[/QUOTE]

Foss could be a lucky winner if they get those negotiations sorted with the Port of Seattle so some money should at least flow into US pockets:

Foss Maritime floats plan to use Port’s Terminal 5

Not sure how much Vigor will cash in this time.

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[QUOTE=c.captain;153081]they certainly ain’t gonna be towing the KULLUK! In fact, since tending the KULLUK was the intended purpose of the AIVIQ what the FUCK is it now supposed to do for Shell? My GOD the power that Gary Chouest must wield in the offshore that Shell didn’t tell ECO to go fuck themselves and their Huge Blue Elephant after the idiocy and hubris of Chouest’s people cost Shell a valuable rig![/QUOTE]

I suspect that AIVIQ will be towing the DISCO, running anchors, doing ice management, acting as a standby boat, and what not. Hopefully, Shell will be hiring some good consultants to help them vet the people Chouest wants to send to Alaska.

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[QUOTE=tugsailor;153105]I suspect that AIVIQ will be towing the DISCO, running anchors, doing ice management, acting as a standby boat, and what not. Hopefully, Shell will be hiring some good consultants to help them vet the people Chouest wants to send to Alaska.[/QUOTE]

TOWING THE DISCOVERER! They just put a new main engine in that POS!

I’m clenching my jaws again…

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Maybe not then.

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All systems are go from what I hear still there is supposed to be a MODU so maybe Aiviq will tow that

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[QUOTE=rshrew;153121]All systems are go from what I hear still there is supposed to be a MODU so maybe Aiviq will tow that[/QUOTE]

http://www.deepwater.com/Documents/RigSpecs/Polar%20Pioneer.pdf

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Ther are five boats in Fourchon getting ready to go north. Three Harvey and two Chouest boats. Infact the Chouest boats look like they are ready to head out any minute. The Nanuk’s deck is full of spools of 3 in wire and the Ross has a deck full of anchors and rigging equipment. All are getting a full day rate just waiting for the word to go.

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[QUOTE=Jemplayer;153172]Ther are five boats in Fourchon getting ready to go north. Three Harvey and two Chouest boats. Infact the Chouest boats look like they are ready to head out any minute. The Nanuk’s deck is full of spools of 3 in wire and the Ross has a deck full of anchors and rigging equipment. All are getting a full day rate just waiting for the word to go.[/QUOTE]

Fennica and Nordica are on stand-by for Baltic Sea icebreaking operations, but I doubt they will be needed this winter and might get an early release from their primary task.

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Sounds like Foss needs to hurry up to get that Terminal 5 contract in its pocket. Sounds like the whole fleet will gather in that port.

Also a bit early to go straight to Dutch H. now.