On top of the world - Part 2

Oilfield Technology Correspondent Gordon Cope examines the state of the oil and gas industry in the highly challenging Arctic region.

Problems

The Arctic presents unique challenges. Apart from the obvious severity of the weather (in which six months of darkness is accompanied by blizzards and -50 °C temperatures), there are issues related to boundaries, jurisdictions and a host of other concerns. Canada, for instance, views the NWP as part of its mainland, and wants jurisdiction as an internal body of water (such as the Thames River) over which it has sole authority. The US and EU, not surprisingly, view it more as an international passageway (such as the Strait of Gibraltar), in which they are allowed free passage. Such distinctions matter because free passage provides few controls in which to regulate environmental rules and the movement of military vessels.

Several sections of the Arctic are also under territorial dispute. Some boundaries were established centuries ago under less than rigorous surveying technology. The US, Canada and Russia have disputes in the Alaska region that includes a 21 000 km² slice of territory that may hold as much as 1.7 trillion m³ of gas and 6 billion bbls of oil.

New drilling kit and infrastructure in the remote regions are expected to cost tens of billions of dollars. A floating drill rig capable of exploring in deep Arctic waters is estimated to cost at least US$ 1 billion and take five years to design and construct. An offshore pipeline would have to be trenched sufficiently deep to avoid ice scour. Onshore, pipelines must be carefully constructed to deal with permafrost.

Ironically, the higher temperatures predicted by climate change will have a deleterious effect on current Arctic roads and buildings. Infrastructure is engineered on the basis of the presence of permafrost, a layer of water and sediment just beneath the surface that remains frozen year-round. Pilings for buildings are driven into the layer, forming foundations as strong as concrete. As temperatures rise however, permafrost thaws into cold mud; asphalt roads collapse and pilings shift and buckle. Of the 78 000 pilings supporting the Trans-Alaska Pipeline, about 25 000 are having problems with changes in permafrost, including heaving, tilting and movement.

Additionally, operators must find a way to respond to potential oil spills. As the BP Macondo disaster in 2010 clearly illustrated, it is difficult enough dealing with a blowout even when the largest offshore drilling fleet in the world is only a few hundred miles away. Even if there were a way to rush hundreds of vessels to a blowout, most remote Arctic communities lack the basic infrastructure to support clean-up equipment and remediation crews.

Solutions

Industry and government are well aware of the challenges, and several major initiatives are under way. The Arctic Council is an international body composed of the five main Aboriginal groups and the eight nations that rim the Arctic (Norway, Sweden, Finland, Russia, Denmark’s Greenland, Canada, the US and Iceland). Several years ago, it created an international treaty that will divide search-and-rescue responsibilities among the nations and co-ordinate emergency response efforts. In May of 2013, members formally agreed to co-operate on Marine oil pollution preparedness and response.

In the US, the National Oceanic and Atmospheric Administration (NOAA) and the (Bureau of Ocean Energy Management (BOEM) are analysing how a broad array of Arctic offshore oil and gas activities could affect marine mammals and Alaska Native communities. The Department of the Interior’s Bureau of Safety and Environmental Enforcement and the National Oceanic and Atmospheric Administration’s Office of Response and Restoration are developing an Arctic environmental response management application (ERMA) similar to the one used to handle the BP Gulf of Mexico spill. The system will be based around an interactive GIS map that will show responders the location of spills, assets and infrastructure.

In Canada, the province of Newfoundland & Labrador and the Atlantic offshore industry are investing C$ 16.5 million in the Centre for Arctic Resource Development (CARD). The Centre will focus on medium and long-term needs for petroleum development in Arctic and sub-Arctic regions. Already, R&D priorities gathered from a broad industry consultation programme have been distilled into an Arctic Development Roadmap (ADR).

In October, the University of Calgary announced the creation of ‘Energy Innovations for Today and Tomorrow, an Earth Sciences’ research group that will focus on the discovery of new sources of energy, extraction with minimal environmental impact, exports to new markets and plans for the future energy developments. Research teams will study conventional and unconventional energy resources from the Arctic to the deep biosphere, encompassing disciplines including petroleum geology and engineering, geophysics, geochemistry, sedimentology, paleontology, hydrogeology, basin analysis, materials science and bio-geoscience. Funding in excess of C$ 2 million will be used to hire more than 30 assistant professors, postdoctoral students and research chairs.

Arctic explorers have formed an Arctic Oil Spill Response Technology joint industry programme (JIP), which will focus on building knowledge on Arctic offshore oil spill response expertise. The members include BP, Chevron Corp., ConocoPhillips, Eni, ExxonMobil, North Caspian Operating Co., Royal Dutch Shell PLC, Statoil and Total. Research will focus on oil dispersants, in-situ burning, mechanical recovery and the fate of dispersed oil under and in ice.

Boundary disputes are being resolved. Russia and Norway were able to settle their 40-year old dispute encompassing 170 000 km² in the Barents Sea region to their mutual satisfaction. Canada and the US are also expected to resolve the Alaska/NWT disagreement.

Statoil has made significant R&D investments in order to develop special Arctic exploration and development equipment and processes. Leveraging on its decades-long experience in cold offshore environments, it is now focused on a tailor-made, Arctic drilling unit with robust ice-impact resistance, dynamic rig-positioning and automated rig drilling capabilities for faster operations. Statoil and other firms are also working on technologies that would create a platform-free offshore production for gas fields. Well manifolds, separations systems, reinjections systems and compressors are being designed to operate on the sea floor, far below ice and storms. Statoil expects to have the first facilities installed by 2020.

The development of new technologies in order to explore, drill and produce in the Arctic in an efficient manner, and the creation of international bodies and processes to protect operations from mistakes and create ways of cleaning up spillage are well underway. But even the most optimistic industry participants admit that widespread activity is still several decades away; and many circumstances, both foreseen and unforeseen, could seriously derail those prospects. It will take commitment from governments, industry and international agencies to create the climate in which safe, sustainable production in the Arctic becomes a reality.

Part 1 of this article can be reached here.

Adapted by David Bizley

Read the article online at: https://www.hydrocarbonengineering.com/special-reports/21012014/on_top_of_the_world_part_2/