Arctic Drilling

(from Lloyd’s Report 2012: Arctic Opening – Opportunity and Risk in the High North)

As exploration for hydrocarbons moves into ever remoter regions of the Arctic, the harsh environment presents many challenges and risks for drilling operators. Maintaining well integrity is essential for drilling and producing operations. In the Arctic, drilling through permafrost in the rock can be challenging as the heat of the circulating drilling fluids (known as mud) can cause the permafrost to melt, removing the competency of the formations upon which the well foundations (casing and cements) rely, destabilizing the well, and potentially leading to a blowout. During the producing phase the heat of the produced fluids can have a similar effect.

The difficulties involved in drilling in the Arctic may mean that summer drilling campaigns inadvertently last well into the more hazardous winter season. If a spill did occur in the Arctic, some commentators have suggested that there might be insufficient resources and equipment to stem an out-of-control well quickly (xlviii). Icebreakers are in short supply, as seen by the difficulties experienced by the US Coast Guard in finding a suitable vessel to deliver an emergency shipment of fuel to an isolated community in Alaska in December 2011¹ . There is also a shortage of Arctic-class mobile rigs capable of drilling relief wells in the event of a spill. The US administration’s recent approval of Shell’s plan to drill in US Arctic waters only went ahead following the submission of an emergency plan that included a fleet of 6 oil-spill response vessels, as well as a US Coast Guard vessel on standby near the rig at all times² .

The harsh weather conditions in the Arctic raises questions over whether offshore drilling rigs can withstand its frequent severe storms. In December 2011, the Kolskaya floating drilling rig capsized and sank while under tow during a strong storm in the Sea of Okhotsk (just outside the 60° definition used by this report), killing 53 people³  and causing an insurable loss of over $100 million⁴ . The drilling rig was not carrying any oil when it sank, but there is concern that similar severe Arctic weather could destabilise other installations that store significant quantities of oil (such as FPSOs (xlix)), causing an environmental disaster⁵ . The disaster also showed how cold waters dramatically reduce the chance of survival of any crew.

Damage caused by icebergs and offshore sea ice is a further risk for mobile drilling rigs and, with melting sea ice increasing the area of open waters, these rigs will need to cope with stronger waves. Various types of installations are used to drill in the Arctic, including drill ships, artificial structures and ice islands. Arctic drilling rigs are normally conical in shape at sea ice level and use steel plates that can be up to four inches thick to reduce the potential damage. Icebreakers are commonly used to break up the ice around the drilling installations and many operators employ data from ships and satellites to provide a real-time picture of sea ice movements⁶ . Personnel employed as ice observers on all vessels associated with the drilling operations can also provide a more traditional source of information. However, employing rigs that can be disconnected and moved rather than those that are fixed in installation may reduce the likelihood of collision. Finally, double-hulled tankers are now the norm and are used to transport oil from the rigs and minimise the potential for pollution from a collision with an iceberg.

Technology adapted for the Arctic is already used in regions with similar conditions, including on Sakhalin Island. For instance, a FPSO vessel in Newfoundland has the capacity to disconnect the turret and mooring system from the vessel, leaving these parts submerged beneath the depth of the iceberg and allowing the vessel to be moved out of its path.

Some oil companies, notably Statoil, have raised the possibility of removing the need for surface vessels or equipment at all and conducting all drilling operations from the seabed⁷ . Designs for Arctic-capable submarines are under way at the Norwegian Marine Technology Research Institute in Trondheim to replace the service vessels that are currently still required to perform maintenance on sub-sea installations. However, conducting operations on the seabed could mean that pollution spills go unnoticed for some considerable time. Those wishing to drill in the Arctic will be required to demonstrate that they have effective disaster management plans in place. In some jurisdictions this may be more onerous in the Arctic than elsewhere. The Canadian regulator has recently announced that all contractors will be required to have a contingency plan in place and has reaffirmed the requirement that companies have the capability to drill a relief well to stop an out-of-control well during the same drilling season⁸ .

Drilling systems and sub-sea pipelines are also at risk from submarine landslides and ice scours in the seabed. Mapping of the seabed of the Beaufort Sea has indicated unstable areas along the 50,000 square kilometres of the Beaufort continental shelf that could trigger potential landslides⁹ . Arctic regions such as the Nunavut territory of Canada can also experience earthquakes which could damage onshore as well as offshore facilities¹⁰ . Similarly, the Geological Survey has identified more than 17,000 known ice scours in water depths of 5–30 metres. Iceberg scouring that leaves these gouges can put immense pressure onto pipelines and sub-sea wellhead completions. Submerging them below the maximum depth at which these scours appear is not always sufficient as soil displacement following the movement of the ice can be equally disruptive to the pipeline.

Footnotes:

(xlviii) BBC News (October 2011) Arctic oil exploration: Potential riches and problems

http://www.bbc.co.uk/news/business-14728856

(xlix) Floating Production Storage and Offloading unit. These vessels are designed to receive oil from nearby platforms or rigs, process the oil and then store it ready to be transported via tanker or pipeline.

Charles Emmerson, Glada Lahn, 2012, Arctic Drilling, Lloyd’s.©