Beneath political firestorm on Arctic Ocean drilling, two projects make steady progress

Shell rig leaving Dutch Harbor in October 2015. Shell may have abandoned its efforts to drill in Arctic federal waters, but two other companies are still moving forward with plans to do so. (Photo by John Ryan/KUCB)

Efforts to drill for oil in the Arctic Ocean put Alaska at the center of an international debate. It’s a highly political topic, one both former President Barack Obama and President Donald Trump weighed in on. And to this day, there hasn’t been any oil produced from Arctic waters solely owned by the federal government.

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So today, when it comes to drilling for oil in Alaska’s Arctic Ocean, you’d be forgiven for thinking not a lot is happening.

Yes, Shell’s multi-billion dollar effort to find oil in federal Arctic waters is a thing of the past. And yes, the Obama administration then took several steps to cut back on drilling in Arctic waters — actions the Trump administration is now working to undo.

But it turns out there is movement to get oil out of federally-owned parts of the Arctic Ocean. It’s happening slowly, steadily and without a lot of fanfare. Two companies’ efforts to drill for oil in the Beaufort Sea are chugging forward and, at least for now, they’ve largely avoided the national spotlight.

First, the federal Bureau of Ocean Energy Management is reviewing the Texas-based Hilcorp’s Liberty project. The plan calls for producing oil from a man-made, gravel island east of Prudhoe Bay as early as 2020.

The other project, led by Italian company Eni, is at an earlier stage. Eni is working to get the final go-ahead to explore for oil west of Prudhoe this winter, using a gravel island in state waters. They aim to drill thousands of feet down and then tens of thousands of feet horizontally to the north — to see if there’s any oil worth recovering.

Farthest from the finish line, but still of note, is Arctic Slope Regional Corporation. The Native corporation acquired federal leases from Shell late last year, and is now asking the federal government for approval to extend the leases, which are set to expire this year.

Both Eni and Hilcorp had their leases before the Obama administration limited Arctic development, so they’ve slipped past the influence of both Obama’s and Trump’s executive pens.

Another reason the two projects are happening below the national radar? Jim Kendall, regional director for the Bureau of Ocean Energy Management in Alaska, said in many ways, they don’t compare to Shell’s massive Arctic undertaking.

“It’s kind of apples and oranges,” Kendall said.

Shell’s exploration was 70 miles from shore and in waters around 170 feet deep. Hilcorp and Eni’s operations would be closer to land and pipelines, in waters not a lot deeper than an Olympic diving pool.

“And maybe that’s why it just hasn’t caught a lot of attention. I mean — it’s another gravel island, it’s been done before. It’s close to shore; it’s not 70 miles offshore,” Kendall said.

When Kendall said ‘it’s been done before,’ he was referring to a handful of existing man-made gravel islands in the Arctic Ocean companies are already drilling from. The key detail, though, is that these islands are in state waters. If it gets the final go-ahead, Hilcorp’s Liberty Project would be the first to produce oil in solely federally-owned Arctic waters.

It sounds like a big deal — and it is — but Hilcorp also wants to hit home the message that they’re not doing something completely new. In Alaska, the company faces an extra level of public scrutiny after safety incidents like a gas leak from one of its fuel lines in Cook Inlet this spring.

Mike Dunn, Hilcorp’s project manager for Liberty, argued the drilling plan isn’t especially risky.

“From our perspective it’s — I won’t say it’s simple. But it’s been done often enough where we don’t have to come up with some new technology,” Dunn said. “A lot of folks before us have figured this out.”

Michael LeVine, senior Arctic fellow with the Ocean Conservancy in Juneau, acknowledged that compared to what Shell was trying to do, the risks for Hilcorp and Eni’s projects are at least better understood. But, LeVine said, any drilling in Arctic waters is worth paying close attention to.

“They’re still massive industrial undertakings in a risky and remote place,” LeVine said.

But do these projects mean there’s still a promising future for oil drilling in Arctic waters? Oil industry supporters hope so. But beyond politics, Kendall said there are larger forces that have a big influence on that future: oil prices and climate change.

“If we have a longer drilling season, less ice, for some reason oil prices go up again. Then, of course, the market changes,” Kendall said. “And then industry, they have to decide what they would like to pursue.”

Kendall said it’s too early to say if the Eni and Hilcorp projects herald the triumphant return of big-time oil development in the Arctic Ocean.