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ConocoPhillips Suspends 2014 Alaska Drilling Plans

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ConocoPhillips Suspends 2014 Alaska Drilling Plans

ConocoPhillips will place on hold its 2014 drilling plans for Alaska's Chukchi Sea due to the uncertainties of evolving federal regulatory requirements and operational permitting standards.

While the company is confident in its expertise and ability to safely conduct offshore Arctic operations, ConocoPhillips believes it needs more time to ensure that all regulatory stakeholders are aligned, said ConocoPhillips Alaska President Trond-Erik Johansen in a statement.

"We welcome the opportunity to work with the federal government and other leaseholders to further define and clarify the requirements for drilling offshore Alaska," Johansen commented. "Once those requirements are understood, we will reevaluate our Chukchi Sea drilling plans. We believe this is a reasonable and responsible approach given the huge investments required to operate offshore in the Arctic."

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, a ConocoPhillips spokesperson told Rigzone in an email.

Royal Dutch Shell plc in February suspended its 2014 offshore Alaska drilling plans, saying it needed more time to ensure the readiness of its equipment and employees for future drilling.

Last month, the U.S. Department of the Interior (DOI) concluded that Shell failed to finalize key components of its 2012 Alaska Arctic drilling program. DOI called on the industry and government to collaborate to develop an Arctic-specific model for offshore Alaska oil and gas exploration.

DOI Secretary Ken Salazar said the agency would proceed with ConocoPhillips using the same regime it did with Shell. While the Obama administration is interested in pursuing Arctic resources, Salazar said they wouldn't allow shortcuts in terms of requirements, and that exploration would only be carried out with the "utmost safety."

Greenpeace International called decisions by ConocoPhillips and Norway-based Statoil ASA to shelve Arctic drilling plans on admission that the oil industry is still not capable of meeting the enormous challenges posed by operating in the world's most extreme environment.

"The time has come for governments around the world to call for a permanent halt to the reckless exploitation of the far north," said Greenpeace International Arctic campaigner Ben Wycliffe in a statement.



Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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