Following a more than two-year hiatus, Arctic exploration offshore the U.S. is bound for a comeback now that the U.S. Bureau of Safety and Environmental Enforcement (BSEE) has approved Eni SpA’s (NYSE: E) exploration drilling plans for the Beaufort Sea.
Targeting a formation in the new Harrison Bay Block 6423 unit, the Italian major plans to use extended-reach drilling techniques to drill into federal submerged lands from Spy Island, a manmade island in the Beaufort Sea, BSEE said. Eni’s exploration plans include drilling two exploration wells and two potential sidetrack wells in the next two years. Work could kick off as soon as next month.
But BSEE cautioned that its Alaska regional office must conduct a review to ensure that technical adequacy, safety and environmental sustainability standards are met. Before drilling operations begin predrill inspections will also be carried out at the drill site.
“BSEE Alaska Region staff conducted a thorough and complete review of Eni’s well design, testing procedures and safety protocol,” BSEE Alaska Region Director Mark Fesmire said in a statement announcing the application’s approval. “Exploration must be conducted safely and responsibly in relation to the Arctic environment and we will continue to engage Eni as they move forward with drilling its exploratory well.”
The application was submitted by Eni US Operating Co. in August, BSEE said.
Eni is already an active player in Alaska, where it holds interests—ranging from 30% to 100%—in 43 exploration and development blocks, according to the company’s website. Eni is currently producing oil from the Nikaitchuq (100% interest) and Oooguruk (30% interest) fields in the Beaufort Sea with net overall production at about 24,000 barrels per day (bbl/d).
The drill site for the upcoming exploration work is about three miles offshore Alaska’s Oliktok Point, where Eni has 18 producing wells, 13 injector wells and one disposal well.
The exploration work is expected to give a boost to the Alaskan economy, adding between 100 and 110 jobs during drilling operations. If the operations prove successful, new development could result in up to 150 jobs in the region plus 20,000 bbl/d in new production, according to Eni.
The Bureau of Ocean Energy Management (BOEM) conditionally approved Eni’s Beaufort Sea exploration plans in July. Approval was contingent on several conditions including approval by Alaskan authorities, BSEE approval and notification of any deviation from planned activities.
“Eni brought to us a solid, well-considered plan,” Walter Cruickshank, BOEM’s acting director at the time said in a July statement. “We know there are vast oil and gas resources under the Beaufort Sea, and we look forward to working with Eni in their efforts to tap into this energy potential.”
If the exploratory work proceeds as planned, it will mark the return of Arctic exploration drilling offshore Alaska. Eni will explore the Harrison Bay Block 6423 Unit in partnership with Royal Dutch Shell Plc (NYSE: RDS.A), BSEE said.
Shell halted its U.S. Arctic exploration work in 2015, citing as reasons results from its Burger J exploratory well, high costs and an unpredictable federal regulatory. The campaign at Burger, which found oil and gas but not enough to merit further exploration, followed some unfavorable incidents: protestors—fearing potential environmental harm—blocked an icebreaker vessel and a drilling rig broke free and grounded in 2012.
The freeze in activity by Shell also came as oil and gas work worldwide slowed, including in costly E&P areas, as the downturn forced companies to be more frugal.
Now as market conditions improve with the Trump administration pushing an energy dominance agenda in the U.S., the pace is picking up.
Velda Addison can be reached at firstname.lastname@example.org.
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