Algae, Bacillariophyta

Taken by a scanning electron microscope

1
CHAPTER ONE:

The Origins of
Oil and Gas

www.shell.com/us/alaska
 Sandstone
Close-up of textured pattern on a sandstone

Organic Origins
The story of oil and gas begins hundreds of millions of years ago when the Earth was
covered in swamplands filled with huge trees and the seas were teaming with microscopic
plants and animals. The oil and gas deposits started forming about 350 to 290 million
years ago during the Carboniferous Period, which gets its name from the basic element
in oil and gas: carbon. A popular belief is that oil comes from dead dinosaurs. It doesn’t.
The giant reptiles lived mostly from 250 to 65 million years ago, and most scientists
believe oil actually comes from the tiniest plants and animals that preceded them.

Source and Reservoir Rocks So as you can see, petroleum* reservoirs aren’t
underground pools as is commonly believed. They
As they died and sank to the ocean floor, the varieties of crude include “sweet,” (lower sulfur) and pressure from thousands of feet beneath the Earth’s
are actually rocks soaked in oil and gas, just as water
decomposing organisms, along with mud and silt, “sour” (higher sulfur). The terms “light” or “heavy” surface continued to push the oil and gas into areas
is held in a sponge. (The word petroleum comes
created hundreds of feet of sediment. Sand, clay refer to the density of the crude and how easily it of less resistance. Sometimes the caps are not perfect
from the Latin for “rock oil.”) And they’re not
and minerals settled over this organic-rich mud flows. The heavier the crude, the harder and more seals and petroleum escapes to the Earth’s surface
alone in that sponge-like home. Other substances
and solidified into rocks. The weight of the rocks expensive it is to refine for use in products. Oil, rather as natural seepage, which can be spotted by oily
such as water, salt, carbon dioxide and hydrogen
above pressed the mud into a fraction of its original than natural gas, is what produces the gasoline used residue on the surface soil and
sulfide can get trapped in the rocks too. Oil and gas,
thickness. Heat from within the Earth cooked the in cars. Diesel, jet fuels, heating oil, lubricants and rocks. Underwater seeps
however, contain mostly two elements: hydrogen
mud’s organic remains into a soup of hydrocarbons, asphalt also come from oil. Natural gas is a vapor, can bubble up to the
and carbon. How those elements are arranged
the main element of petroleum and natural gas. but it can be pressurized and cooled to become a surface and leave an
determines the form of the hydrocarbon. For example,
Those liquids and vapors were emitted from these liquid (LNG stands for liquid natural gas) for easier oily sheen. Early
natural gas contains the simplest hydrocarbon,
source rocks, moved upward through the sediment transportation. The vapor is colorless and odorless, but consumers such as
methane, while crude oils can be made up of
pores, and accumulated between the grains of the gas companies add a chemical to make it smell bad so Native Americans
more complex liquid and solid hydrocarbons.
sediment, or “reservoir rock.” The reservoir rocks often leaks can be more easily detected. Natural gas is a fuel used blankets to
contained water, which then pushed the lighter oil used to generate electricity; it is also used in plastics, skim oil off the
and gas upward until they hit an impermeable rock Oil and Gas Varieties fertilizers, fabrics and other products. surface of streams and
layer, such as mudstone or salt rock, which becomes a The fluids and gases caught in these “traps” separate lakes to use in medicines
“seal” or “cap rock.” The oil and gas are thus trapped and to water-proof canoes. While
into three layers: water at the bottom, oil in the middle The Migration of Hydrocarbons
in “reservoir rocks,” usually sandstone or limestone. and natural gas on top. The oil, sometimes referred seeps can signal that there is oil below ground, they
As the tectonic plates of the Earth’s crust shifted over also tell us that much of the oil may have already
to as “crude,” is usually black or dark brown, but it
millions of years, some of them would rise and others escaped and there may not be much left to find.
can also be yellowish or even greenish. The different
sink, collisions between plates were common as the
land became sea and sea became land. Tremendous
* The terms “petroleum,” “hydrocarbons” and “oil and gas” are often used interchangeably throughout this text. For definitions and distinctions, refer to the glossary at the end of this chapter.

2 THE ORIGINS OF OIL AND GAS THE ORIGINS OF OIL AND GAS 3
 Geological History of Alaska’s Oil

Beneath the Earth’s Surface than three miles, the liquid petroleum can become which the petroleum resides. A “fold” trap is formed from within the Earth to create a “dome.” The salt
“overcooked,” leaving only the natural gas. when rock layers are pushed upward into an arch or dome breaks through the layers and when it meets the
Most oil and gas fields are buried anywhere from one to
“anticline.” The hydrocarbons move into the uppermost reservoir rock it blocks the path of the hydrocarbons,
four miles under the Earth’s surface, with the record well
porous layer of the arch until they hit the impervious which then accumulate around the pillar. Traps are
at more than seven miles. Reservoirs under the ocean Types of Traps
rock seal. In a “fault” trap, the reservoir rock is sealed often a combination of these varieties because the forces
can be covered by as much as two miles of water on The Earth’s tremendous forces can change the original off along a fault or fracture when earth movements creating them can deform the rocks in so many ways.
top of that. Oil and gas are generally trapped together, form of the reservoir rocks, moving them up, down shift the impermeable rock layer over the reservoir
but sometimes they separate and form fields containing or sideways, and folding the layers into arches or rock. Another kind of trap occurs when salt or some
predominately one or the other. If a reservoir lies deeper troughs. These shifts can determine the type of trap in other non-porous material is pushed up by pressure

4 THE ORIGINS OF OIL AND GAS THE ORIGINS OF OIL AND GAS 5
 Reserves Around the World
Glossary
While most of the known oil and gas reserves produced in Russia, Canada, China, Brazil,
are held in the Middle East, they can be Norway, Mexico, Venezuela, Great Britain, Anticline – an arch of stratified rock in which the layers bend downward Reserves – the unproduced but economically recoverable oil or gas in a
in opposite directions from the crest. Anticlines form many excellent formation that has been proved by production.
found in many places around the world, Nigeria and the United States — chiefly
hydrocarbon traps.
such as Australia, Italy, Malaysia and New Texas, California, Louisiana, Oklahoma, Reservoir (Rock) – a subsurface body of rock having sufficient porosity and
Cap – a layer of impermeable (non-porous) rock that seals hydrocarbons that permeability to store and transmit fluids.
Zealand. The leading petroleum producers Kansas and Alaska. Offshore reservoirs have have migrated up into reservoirs.
Seal – a layer of impermeable rock that forms a barrier to hydrocarbons that
include Saudi Arabia, Iran, Iraq, Kuwait been discovered in the North Sea, Africa, Fault trap – a trap for oil or gas in which the closure forming the trap results have migrated upward into a reservoir rock.
from the presence of one or more faults.
and the United Arab Emirates. Oil is also South America and the Gulf of Mexico. Seep – the leakage of hydrocarbons that have not been sealed into
Hydrocarbons – organic chemical compounds of hydrogen and carbon reservoirs by impermeable cap rocks.
atoms forming the basis of all petroleum products. They may exist as gases,
liquids or solids. An example of each is methane, hexane and asphalt. For Source (Rock) – a rock rich in organic matter that if heated sufficiently will
this document the terms “hydrocarbons,” “petroleum” and “oil and gas” are generate oil or gas.
interchangeable.
Tectonic – pertaining to the structure of the Earth’s crust.
Methane – a colorless, odorless gas that is stable under widely varying
Trap – a rock formation that contains petroleum that has migrated upward
pressure and temperature conditions in the absence of other compounds.
from a source rock and became trapped by an impermeable layer above
It is the lightest and most abundant hydrocarbon gas and the principal
and sealed into a reservoir.
component of natural gas.

Petroleum – a substance occurring naturally in the earth in solid, liquid, or

gaseous state and composed mainly of mixtures of chemical compounds of
carbon and hydrogen, with or without other nonmetallic elements such as
sulfur, oxygen and nitrogen. In some cases, especially in the measurement
of oil and gas, petroleum refers only to oil — a liquid hydrocarbon — and
does not include natural gas or gas liquids such as propane and butane. For
this document the terms “hydrocarbons,” “petroleum” and “oil and gas” are
interchangeable.

Sources
• American Petroleum Institute • Schlumberger Oilfield Services

• Encyclopedia Britannica • Society of Petroleum Engineers

• Oil and Gas UK • The Learning Space (http://openlearn.open.ac.uk)

• Natural Gas Supply Association • U.S. Minerals Management Service, Department of the Interior

• New World Encyclopedia

Photo credits for Geological History of Alaska’s Oil and Gas timeline: Space, courtesy of NASA; Rock formation, courtesy of seakayakphoto.com; Zebra mussels, by Amy Benson/ U.S. Geological
Survey; Sea Lamprey, courtesy of the Environmental Protection Agency; Stoneflies, courtesy of the Environmental Protection Agency; Spider, by James Solomon, USDA Forest Service; Japanese
honeysuckle, by John J. Mosesso, National Biological Information Infrastructure (NBII); Amphibian, by John J. Mosesso, (NBII); Crocodile, by Thomas A. Hermann, (NBII); Lizard, by Randolph Femmer,
(NBII); Forest, by Randolph Femmer, (NBII); Bird, by John J. Mosesso, (NBII); Flock of birds, by John J. Mosesso, (NBII); Fox, by John J. Mosesso, (NBII); Flowers, by John J. Mosesso, (NBII); Fossilized
tracks, by Thomas A. Hermann, (NBII); Monkey, by John J. Mosesso, (NBII); Lion, by Thomas A. Hermann, (NBII); Glacier, by Russels Gletscher, © Free Software Foundation, Inc.; Pangeo map, by Kieff,
© Free Software Foundation, Inc.; Globes, by Antonio Snider-Pellegrini; Earth, courtesy of U.S. Department of Defense; Dead tree, by Magnus Manske; Allosaurus, by Grzegorz Wysocki; Skate, courtesy
of U.S. National Oceanic and Atmospheric Administration.

8 THE ORIGINS OF OIL AND GAS THE ORIGINS OF OIL AND GAS 9
Shell in Alaska To find and develop commercial
hydrocarbon resources in the Chukchi
and Beaufort Outer Continental Shelf.
To support communities where we
operate in benefiting from any potential
offshore activities economically
and socially. To respect the way of
life of the residents of Alaska.
 2
CHAPTER two:

OIL AND GAS

Offshore
Exploration

www.shell.us/alaska
 Offshore Exploration
Understanding how oil and gas* are formed gives us important information for the first stage of
petroleum development: exploration. Knowing the geological age, rock compositions and other
details of potential reservoir systems gives us some hint about where to look geographically.
Finding them, however, is a long and complicated process. It can take years of research, survey
work and exploration drilling before a single drop of oil or gas is produced. And even if they
are discovered, the quantity or quality of the hydrocarbons may not be sufficient for production.
KULLUK
Exploration is also expensive, but while it may take five to 15 years to find and develop an oil and The Kulluk is preparing to be wintered in Herschel Basin (Offshore Yukon
Territories, Canada) with help from support vessels: the blue and white
gas field, it can produce for as long as 50 years. Even if oil or gas is not found in a specific area, Fennica (at left), and the smaller KN10 barge (at right).

the information gained from these operations enhances our understanding and allows us to improve
our future decisions. Today, technological advances allow us to find hydrocarbons more quickly
Jeffery Loman, assistant
and economically than ever, while reducing the environmental impact of exploration operations. director for the U.S. Minerals
Management Service,
announces bids for the
offshore petroleum leases in
Early Explorers it wants to search. In the United States, most
the Chukchi Sea in Anchorage,
Tools of the Trade:
offshore drilling takes place in state waters or in Alaska on Feb. 6, 2008. The Survey Technology
Oil was once produced only from places that were
the federal Outer Continental Shelf (OCS). State U.S. Minerals Management
easy to identify and access. In the 1850s, Canadian The more challenging oil and gas reservoirs we search
and sometimes local governments typically have Service opened bids within
entrepreneur Charles Tripp found “black goo” 29 million acres of the Arctic for today do not usually give us any visible clues
authority over operations within three miles of
seeping into the water well he was digging for his Ocean for oil exploration. about where to find them. Instead, explorers must use
shore. The federal government controls the rights
factory. That hole near Black Creek, now called indirect survey methods to determine the best places
beyond that to about 200 miles offshore, where
Oil Springs, became the first commercial oil well to drill exploratory wells. These methods look for the
they are administered by the Department of
in North America, marking the beginning of the kinds of geological formations that are most likely to
Interior’s Minerals Management Service (MMS). A company may delay or decide against exploration
petroleum age. The oil rush that followed prompted contain petroleum. Measuring the magnetic properties
explorers to start looking beyond the “easy” oil drilling on its blocks for a variety of reasons. Sometimes of subsurface rocks can reveal the presence of granite,
Companies obtain these rights by bidding on blocks there are long waiting lists for the workers and
sources, searching deeper below the Earth’s surface or other types of rocks that might push petroleum
of OCS territory that the MMS auctions at various equipment the company needs to contract for
and farther around the globe. Some of the most upward into subsurface traps. In magnetic surveys, a
times of the year. A lease block is typically nine the operations. In other cases, information
promising areas for petroleum development today are boat tows a “magnetometer” that can record magnetic
square miles. The lease terms are usually granted for gathered after the lease sale may indicate that a
also in the most remote corners of the world, with distortions in the Earth’s crust. Another device called
five, eight or 10 years, depending on the anticipated block is not as promising as previously believed.
challenging geographic and climate conditions. a “gravimeter” indirectly “weighs” the rocks. It can
time needed to explore and develop the potential The new data may suggest that there are not
oil and gas resources. If development is established detect rocks that seal reservoirs, the porous materials
enough hydrocarbons for development, or that in which petroleum can lie, and formations like
Leasing during the initial term of the lease, the rights are other conditions make production economically
extended until production stops. The rights are salt-domes that can trap hydrocarbons. Another test,
To begin any exploration, developers must obtain unfeasible. Because companies must make annual called geochemistry, involves taking soil samples and
returned to the MMS when the lease expires. payments on leased blocks, they have an economic
the rights from the owner whose land or waters testing them for faint traces of hydrocarbons that have
incentive to move forward with exploration seeped to the surface from underlying reservoirs.
* The terms “petroleum,” “hydrocarbons” and “oil and gas” are often used interchangeably throughout this text. For definitions and distinctions, refer to the glossary at the end of this chapter. operations or relinquish their rights to the MMS.

2 OIL AND GAS OFFSHORE EXPLORATION OIL AND GAS OFFSHORE EXPLORATION 3
 Assessment of Technically Recoverable Oil and Gas Seismic Surveys
The best method of indirect exploration is the seismic
from America’s Outer Continental Shelf, 2006 survey. This tool enables explorers to see through solid
matter in the same way an ultrasound can see a baby
inside its mother. The process works by sending sound
waves into the seafloor and measuring how long it
takes for the rocks underneath to reflect the waves
back to the surface. That time period can indicate
the varying characteristics of the rocks, just like a ball
bounced on a hard floor will jump back more quickly
than on a carpet. Seismic waves reflecting off dense
rock layers will behave much differently than if they
hit the porous materials. The surveys are conducted
3-D Seismic Survey Imaging
with pulses of sound sent from air-guns on a ship
toward the bottom of the ocean. A very sensitive
recording device called a “hydrophone” is trailed from
The Real Test: Drilling
the stern to record the echoes that bounce back. Though surveys and models might indicate that oil
and gas could be present, the only sure way to find
out is to drill an exploration well, sometimes called
3-D Seismic Surveys a “wildcat” well. As with all oil and gas industry
Three-dimensional (3-D) seismic surveys use several technology, drilling methods have grown in leaps
lines of hydrophones in a grid to record the signals. and bounds from its humble beginnings. The idea of
Sophisticated computer software can then translate digging below the sea for petroleum began early in the
those signals into a “virtual reality,” revealing the 1800s, but it took nearly a century before it produced
thicknesses and densities of the sub-surface rocks, any real results. One of the earliest offshore oil rigs
including those that have been stressed into the was built in 1887 by H.L. Williams, who erected a
types of folds or faults that might trap petroleum. derrick on a 300-foot-long wharf off Summerland,
Seismic surveys produce the best data available about California. Soon many wells were built this way,
petroleum potential short of actually drilling an moving further and further from the coastline. The
exploration well. first offshore rig out of sight of land came in 1947
off the Louisiana coast. Even though the well was
drilled in just 16 feet of water, it marked a major
Avoiding Seafloor Hazards
breakthrough in the industry. With the use of modern
Surveys used in early exploration work can also technology pioneered by Shell, we are currently
identify potential hazards to vessels or seafloor exploring in water depths of more than 10,000 feet.
conditions that may be unsafe for the placement of
exploration drilling rigs. “Shallow hazard” surveys
look for underwater peaks and valleys (topography) Choosing a Rig
or man-made dangers like shipwrecks. In the Arctic, Water depth, weather, seafloor conditions, operational
special surveys on conditions such as ice gouges safety and efficiency all determine what kind of
and strudel scours may be conducted to gather vessels or platforms will be used for drilling. In
data for potential future oil and gas production exploration drilling, the rigs are usually mobile so
activities. (See page 10 for more details.) they can move, with crew, from one site to another.
Some of these moveable rigs are floating units,

4 OIL AND GAS OFFSHORE EXPLORATION OIL AND GAS OFFSHORE EXPLORATION 5
 Conventional Exploration Rigs

such as drillships or partially submerged platforms. Bottom-Supported Rigs

Others are bottom-supported, using legs to stand
There are two types of bottom-supported rigs:
on the seafloor or hulls that rest on the bottom.
submersibles and jack-ups. Fully submersible rigs
operate much like semis, except that they rest on
Floating Rigs the bottom and are most suitable for shallow water.
There are two main types of floating rigs: drillships Some submerge the hull completely so that it rests on
and semi-submersibles. All mobile offshore rigs the bottom with the main deck supported above the
float when moving from one location to the next, surface on rigid columns. Others, called “jack-ups,” are
but these vessels are labeled floating rigs because floated out to the drilling area and have “legs” lowered
they remain buoyant while the well is drilled. down to the seafloor. Sometimes the legs are filled with
water for extra stability so they can work in open-
ocean areas. Jack-ups can drill in slightly deeper water
Drillships than submersibles and are very portable. When its job
Drillships are the most mobile drilling units because is done, the legs are raised up out of the water so that
they are shaped like ships and can rapidly move under the rig once again becomes a floating barge that can
their own power. This type of rig can operate in be towed away or placed upon a large transport ship.
remote, deep waters. A walled hole in the middle of
the ship, called a “moon pool,” is open to the water’s
surface so that the drill bit and other equipment can be
Exploration and
lowered to the seafloor. The rig holds its position over
Appraisal Wells
the top of a well either by being moored (using wire Oil and gas wells are drilled for two general purposes:
or chain attached to anchors or piles in the seafloor) to explore for hydrocarbons and to produce them.
or by thrusters (directional propellers mounted Exploration wells are drilled to determine whether
in the bottom of the ship’s hull) that counteract enough hydrocarbons exist for a sound economic
the forces of wind, waves and ocean currents. investment in production operations. Additional
appraisal wells may be drilled around the site to
determine the size of the reservoir, and how the quality
Semi-Submersibles and quantity of the hydrocarbons may vary throughout
A semi-submersible rig consists of a platform on the field. These wells have a relatively short life cycle
top of columns, which are connected to pontoons. as the time required for drilling, evaluating and properties. These devices are called logging tools and Well Abandonment
These pontoons can be partially filled with water, or abandoning them is typically on the order of days or the findings (or “well logs”) are evaluated to help Most exploration wells are abandoned. This is
ballasted, so that the lower portion is submerged. months. Production wells are usually drilled to last for make future decisions about drilling operations. This typically because they do not contain oil or gas
This helps to stabilize the “semi,” which is held in years, and even decades, until the reservoir is depleted. information includes fluid type (water, oil or natural or they may not be designed for production
position by huge anchors, allowing it to operate gas), rock porosity and thickness of the rock layers. operations. When a prospective site turns out to
in ocean conditions that may be too challenging be void of oil or gas or contains too little to be
for drillships. Because it does not sit directly on
Drilling Drilling Safely worth developing, it is labeled as a “dry hole” and
the seafloor, a semi can drill in deeper waters than The same basic drilling methods and technology are Exploration wells also require additional devices abandoned. Plugs are installed in the wellbore at
bottom-supported rigs. Once the drilling is complete, used for both exploration and production wells. For to control and monitor the hydrocarbons. One various depths to seal it off and to ensure there is
water is pumped from the hull to re-float the vessel a full description of how wells are drilled, refer to key mechanism, called a “blowout preventer” no seepage. After the well has been plugged, the
so that it can be self-propelled or towed away. Chapter 3, Offshore Oil and Gas Production. (BOP), is installed on the top of the casing, or equipment and debris are removed from the site.
“wellhead.” The BOP monitors the balance of
Well Logging the well pressure, which is what prevents the
After a well has been drilled, recording devices are hydrocarbons from flowing out of the reservoir
lowered into the well to evaluate the rock and fluid during drilling. (See Chapter 3 for more on BOPs.)

6 OIL AND GAS OFFSHORE EXPLORATION OIL AND GAS OFFSHORE EXPLORATION 7
ExplorationExploration
and Production At A Glance
Rigs in Arctic Conditions

Arctic Offshore Arctic Exploration

The readily accessible sources of conventional For near-shore, shallow water locations, drilling
oil and gas are depleting as global demand typically occurs during the winter. In deeper
is rising for energy and a multitude of other water, heavy ice conditions mean Arctic
petroleum-based products. The oil and gas exploration must be conducted mostly during
industry must explore in ever-more remote the summer and autumn “open water season.”
and challenging regions to meet these Even then, weather and ice conditions are
needs. Such regions include offshore Alaska, constantly monitored for operational safety.
Canada, Russia, Greenland and Norway, Much of the equipment used is conventional
areas where terrain and weather conditions but has been modified for arctic conditions.
can be some of the most extreme on Earth. Extra staff is required to limit the impact of
the operations on the sensitive environment.
For example, marine mammal observers and
environmental scientists are employed to
monitor and safeguard the wildlife. Seismic
Exploration and Production At A Glance

A: Lease announcement
B: Seismic survey
C: Seismic data imaging
D: Exploration platform
E: Drill bit close-up
F: Gravity-based structure concept
G: Pipeline trenching
H: Blow-out preventer
I: Trans-Alaska Pipeline System
J: Production drill rig
K: Offshore platform
L: Platform control room
M: Gas station pump
N: Onshore production facility
O: Restored arctic landscape

* Timeline may differ based

on project location.
 Exploration Rigs in Arctic Conditions

Glossary
Beaufort Sea, Alaska
Due to heavy ice, arctic exploration must be conducted
mostly during the summer and autumn “open water Blow Out Preventer (BOP) – a series of large valves placed at or near Petroleum – a substance occurring naturally in the earth in solid, liquid, or
season.” Even then, weather and ice conditions are the surface of an oil or gas well to prevent the uncontrolled release of gaseous state and composed mainly of mixtures of chemical compounds of
constantly monitored for operational safety. hydrocarbons. carbon and hydrogen, with or without other nonmetallic elements such as
sulfur, oxygen and nitrogen. In some cases, especially in the measurement
Dry Hole – a well that has been drilled but does not contain enough of oil and gas, petroleum refers only to oil — a liquid hydrocarbon — and
hydrocarbons to be developed for extraction. does not include natural gas or gas liquids such as propane and butane.
For this document the terms “hydrocarbons,” “petroleum” and “oil and gas”
Geochemistry – soil sample surveys that test for faint traces of
are interchangeable.
hydrocarbons that have seeped to the surface from underlying reservoirs.
Porosity – The gaps in rocks that are capable of storing fluid, like a sponge.
Gravimeter (Gravity survey) – a device used to explore for petroleum by
“weighing” the rocks under the surface. It can detect impermeable rocks Rig (Drill) – the derrick or mast, draw works and equipment used in drilling
that seal reservoirs, the porous materials in which petroleum can lie, and oil wells.
formations like salt-domes that can trap hydrocarbons.
Salt Dome – a geological structure where very deep layers of salt flowed
Hydrocarbons – organic chemical compounds of hydrogen and carbon upward through the bedrock from pressure of the overlying rock and
atoms forming the basis of all petroleum products. They may exist as gases, sediment. The salt can break through the sediment and protrude in a dome-
liquids or solids. An example of each is methane, hexane and asphalt. For like shape and sometimes pierce completely to the surface.
this document the terms “hydrocarbons,” “petroleum” and “oil and gas” are
interchangeable. Seismic Survey – an exploration tool which sends pulses of sound into
survey work includes special sound evaluations Drilling the seafloor to identify sub-surface rock characteristics and the possible
Hydrophone – the recording device used to measure the sound waves in presence of hydrocarbons.
to minimize any disturbance to marine mammals. Bottom founded or floating rigs are generally used seismic surveys.
Work is also scheduled to minimize any impact on for offshore exploration in the Arctic, but they are Strudel Scour – a shallow hole in the seafloor caused during the spring
Ice Keel – the undersides of ice ridges, which can strike the seafloor and melt, when rivers overflow existing ice. Cracks and seal breathing holes
regional activities such as subsistence hunting. modified so they can operate safely in extreme leave gouges. allow the water to flow through the ice, causing a circular draining action
conditions. These drill rigs are constructed with that can scour the seafloor and create unsafe conditions for pipelines.
Magnetic Survey – an exploration method which measures the magnetic
Surveying the Arctic Seafloor specific types of steel that will not become brittle in properties of subsurface rocks that may reveal the characteristics of Well Abandonment – the process of capping an exploration well that
In addition to the conventional seafloor surveys to low temperatures. Special structural additions are petroleum reservoirs. has been evaluated, or a production well which has been determined to
contain insufficient amounts of hydrocarbons for production.
avoid hazards for exploration drilling activities and made to reinforce the rig’s integrity so that it can
vessels, arctic operations must identify ice-related resist heavy ice and weather conditions. The rig’s Well Log – data collected from recording devices lowered into a well to
evaluate the rock and fluid properties. The findings are evaluated to help
conditions such as ice gouge marks and strudel work areas are either fully or partially enclosed, make future decisions about drilling operations.
scours for potential future production activities, such and they are heated to ensure worker safety and
Wildcat Well – an exploratory well drilled in an area where no oil or gas
as pipeline installation. Ice gouges are formed by comfort. The blowout preventer (the BOP, or well production exists.
“ice keels” (the undersides of ice ridges) hitting the control equipment) is placed below the well’s mud
line rather than on the drill rig at the surface to
Sources
seafloor. Strudel scours are formed during the spring
melt, when rivers overflow existing ice. Cracks and protect it from the ice. Ice breaking vessels support
seal breathing holes allow the water to flow through floating operations to improve efficiency, lengthen
the ice, causing a circular draining action that can the short drilling season and to escort the rigs to
• American Petroleum Institute • Schlumberger Oilfield Services
scour the seafloor. Helicopters first check for the drain different locations. Upgraded radar systems are used
• Baker, Ron, A Primer of Offshore Operations, University of Texas at • Society of Petroleum Engineers
locations, and then bottom surveys determine whether to monitor ice movements, while satellites and other Austin, 1998
• State of Alaska Dept. of Natural Resources Division of Oil and Gas
the drains resulted in scours. Because weather weather tracking systems are used for forecasting. • Encyclopedia Britannica
• The Learning Space (http://openlearn.open.ac.uk)
conditions change these formations from year to year, • General Maritime Corporation
• The National Ocean Industries Association
the surveys must be conducted annually to calculate • Globalsecurity.org
• United States Maritime Administration
how deep pipelines must be buried to protect them. • Oil and Gas UK
• U.S. Minerals Management Service, Department of the Interior
• Natural Gas Supply Association

• Occupational Safety & Health Administration

10 OIL AND GAS OFFSHORE EXPLORATION OIL AND GAS OFFSHORE EXPLORATION 11
Shell in Alaska To find and develop commercial
hydrocarbon resources in the Chukchi
and Beaufort Outer Continental Shelf.
To support communities where we
operate in benefiting from any potential
offshore activities economically
and socially. To respect the way of
life of the residents of Alaska.
 3
C H A P T E R T hree :

Oil and Gas

Offshore
Production

www.shell.com/us/alaska
 Planning Piltun-Astokhskoye B
a fixed production platform 7.5 miles off
Sakhalin Island in 105’ waters (2007).

When exploration uncovers oil and gas fields with prospects for a good economic return, the next
step is figuring out the best way to extract it. That planning period can take longer than even the
exploration process. The time between the gathering of the first seismic data and the first barrel of oil
is typically at least eight years — and can be as many as 20.

Some of the first things to consider are what types of platforms, pipelines and vessels are best suited
to the region. Decisions must be made about how the petroleum* should be transported to onshore
facilities. Questions about how and where the oil and gas will be processed and transported to market
must also be resolved before any construction can begin on the production phase of the project.

Host Facilities or more and massive waves over 75 feet high, and in these areas are designed to have the strength the islands may be left to erode naturally or dredged
platforms there must be able to withstand those to ensure no damage from earthquakes. to a depth that allows for vessel navigation. Gravel
In offshore production, oil and gas are extracted
forces over an average 30-year production life. islands typically must be strengthened with concrete,
from the wells and brought to the surface to a host
Close monitoring of the weather allows platform rock or steel sheet piles to resist the impact of ice.
facility above the ocean surface. The type of facility Currents
crews to prepare for evacuation by halting drilling
depends on the location, water depth, climate and The changing motions of tides and currents can
activities, securing the facility and shutting down
the facility’s size and capabilities. Environmental, cause severe structural stress to platforms. Tidal Steel Jacket
production. The platforms are structurally reinforced
safety, stakeholder and financial issues are also swings of 30 feet occur in the Cook Inlet twice Typical fixed steel platforms consist of large pipe legs
for added resistance and equipped with devices such
considered when selecting among the options. daily, pushing winter ice against the platform with and a tubular steel cross bracing that form a “jacket.”
as surface controlled subsea safety valves to seal
every cycle. Here, the platforms must be specially The jacket is supported by piles driven into the seafloor
off the wells thousands of feet down. Hurricane-
strengthened to resist ice impact and protect the wells. to transmit wave, wind, current or ice forces into the
Resisting Environmental Forces resistant platforms are designed to survive direct hits
ground. They support a deck that contains a drilling
from these storms without significant damage.
Hurricanes rig, the crew’s living quarters and production facilities.
Bottom Supported Platforms
Platforms in tropical, hurricane-prone regions and Jackets are usually used in shallow to medium water
Earthquakes
areas subject to extreme storms such as the North Sea Gravel Islands depths and are intended for long-term use. Steel
Platforms in seismic zones, like Alaska’s jacket platforms can operate in up to 1,400 feet of
off the coast of the United Kingdom are specifically Man-made gravel islands may be used year-round in
Cook Inlet, California and Russia’s Sakhalin water and withstand hurricanes and winter storms.
designed to resist extreme waves and winds and to water depths of up to 50 feet and can support large
Island, are built to resist the intense ground They are typically not the best solution for severe
minimize environmental damage. In the Gulf of drilling rigs and oil and gas production equipment.
movements caused by earthquakes. Structures arctic areas with large ice ridges and multi-year ice.
Mexico, hurricanes can produce winds of 150 mph Many tons of gravel are placed on the seafloor to
create the island. When production is completed,

* The terms “petroleum,” “hydrocarbons” and “oil and gas” are often used interchangeably throughout this text. For definitions and distinctions, refer to the glossary at the end of this chapter.

2 OIL AND GAS OFFSHORE PRODUCTION OIL AND GAS OFFSHORE PRODUCTION 3
 Production Platforms

Gravity-Based Structures for operating in depths of 1,000 to 3,000 feet.

These platforms take advantage of their large The platforms are slender and so flexible that they
size and heavy mass to support large facilities in sway when hit with these small waves so they don’t
water depths of up to 1,000 feet. They can also be experience the fatigue that a fixed platform would
designed to resist severe arctic conditions, such as see in these great depths. The narrow, flexible towers
multi-year ice and even icebergs in shallow waters have pile foundations and can support a conventional
and in depths of up to around 200 feet. Gravity- deck for drilling and production operations.
based structures (GBSs) can be made of steel or
concrete, and provide support for heavy drilling
Floating Rigs Semi-Submersibles Spars
rigs and production equipment. They function
A semi-submersible production platform consists of Much like the TLP, Spars are moored to the
similarly to gravel islands and jacket structures, but Tension Leg Platforms (TLPs)
a deck supported by four columns and connected seafloor, but with a more conventional lateral
can be used in deeper water than gravel islands and These floating platforms can support a drilling
underwater by four pontoons. Similar to TLPs, mooring anchoring system instead of tension
can resist ice much better than jacket structures. rig and production facilities. The TLPs are similar
semi-submersibles can support living quarters and legs. They are supported by a floating, hollow
They effectively act as steel or concrete islands. to fixed platforms except they use a floating hull
production equipment. Unlike TLPs, their floating cylinder containing extra weight in the bottom,
tethered to the seafloor by a mooring system made
hull uses a conventional lateral mooring system of similar to a huge buoy. About 90 percent of the
Compliant Towers of tension legs. These steel “tendons” limit vertical
steel cables to keep the platform in position and structure is underwater, so it has great stability in
In deeper waters (over 1,000 feet), small steady movements from wind and sea forces and keep
are connected to subsea wells via flowlines. The very deep waters — as much as 10,000 feet.
waves can start to cause fatigue on fixed platform the TLP in position. Many TLPs are built with a
subsea wells are drilled by mobile offshore drilling
structures. The constant action of millions of wave four-column design that supports the deck section.
units (see page 7) since there is typically not a drill FPSOs
cycles against the platform is similar to bending a Below the water, a ring of pontoons connects the
rig on a semi-submersible production platform. Floating production storage and offloading units
paper clip back and forth until, over time, it breaks. columns, much like a semi-submersible drilling vessel.
(FPSOs) can operate in water depths up to 10,000
“Compliant Tower” platforms may be used instead TLPs can be used in up to 6,000 feet of water.

4 OIL AND GAS OFFSHORE PRODUCTION OIL AND GAS OFFSHORE PRODUCTION 5
 Production Systems in the Arctic
feet and are best suited for milder climates or where to maintain productions rates and reducing the
there is limited pipeline systems to transport oil need for additional platforms. The oil and gas
to shore. These ship-like vessels can process all of from subsea wells flow in flowlines to processing
the oil or gas produced from a reservoir, separating platforms that may be from five to 100 miles away.
the oil and gas and storing the oil until it can be
offloaded to tankers for transportation. The storage
capacity of the FPSO allows oil to be stored and Drilling
then periodically offloaded to a tanker so that the Production Wells
tanker does not need to be on standby for long The earliest known
periods while waiting to receive production. The oil wells were
separated gas may be reinjected into a reservoir in the drilled in China in
ground or exported to shore through a gas pipeline. the fourth century
Subsea wells send production to the FPSO through and had depths of
lines called “risers,” which are flexible enough to about 800 feet. Today,
resist the heaving motion of the vessel above. offshore well depths
Designs vary to allow different capabilities; some range between one half and
may be able to store and offload (an FSO for five miles. At such depths, the Earth’s temperatures
example) but do not process hydrocarbons. Most and pressures are tremendous. The pressure can
vessels use mooring systems connected to a “turret.” be 1,000 times greater than at the surface and the
The turret is mounted to the hull and allows the temperature can reach 400 degrees F. Well designs
vessel to rotate freely. Called “weathervaning,” must consider these severe conditions at the bottom
this action allows the vessel’s bow always to point of the well as well as temperatures at the surface,
Designing a structure to resist arctic ice requires wells. Platforms in Russia’s Sakhalin Island use large into the winds and currents, minimizing the which can be -60 degrees F in arctic areas.
impact of those forces. FPSOs are either modified
a thorough understanding of ice forces that is diameter concrete legs to provide similar protection.
existing tankers or can be newly constructed. Wells are inspected and maintained to ensure safe
gained through a combination of actual ice force
Gravel Islands
operations throughout production, which can last
measurements, ice model tests and engineering
Mobile Offshore Drilling Units as long as 50 years. As oil or gas are produced from
analyses. The configuration of an appropriate Gravel islands are another option for arctic regions
Wells are drilled from mobile offshore drilling units the reservoir, it may become necessary to modify the
platform will depend on the severity of the ice at in shallower waters (up to about 50 feet). They are
(MODUs) when no platform exists. MODUs are well or drill new ones to maintain production levels.
the location. In mild ice, the platform may have constructed with gradually sloping beaches and
used for exploration wells and subsea production Production information gathered from the various
multiple columns. In severe ice, the platform may be protective materials to resist ice.
wells. They support the drilling equipment and living wells, and sometimes new seismic data, will allow a
composed of a single, large column. In all cases, the better understanding of the reservoir and potentially
quarters, but have no processing equipment and can be
wells must be protected from the ice by containing Subsea Wells easily moved once the drilling is done. MODUs allow identify additional reserves that can be produced.
them within the structure. Special arctic materials must Subsea production systems typically lie directly on the drilling of additional subsea wells into reservoirs
be used to make sure that the structure can maintain the seafloor. In the shallower waters of the Arctic, that may be many miles away from existing platforms. Drilling
its strength in the extreme cold. Foundations must be however, ice keels or icebergs pose the potential In conventional drilling, the hole-boring drill bit
broad, contain extra “ballast” weight for stability and risk of colliding with the equipment. In these areas, Subsea Production Systems is pressed against the ground and rotated. Heavier
cut into the seafloor to resist ice loading. the subsea equipment may be placed in a hole Subsea production systems are composed of wells, drill pipe and “drill collars” are added to provide
dredged into the seafloor so that the ice will pass manifolds and flowlines lying directly on the seafloor. weight on top of the bit and this enables the teeth
over it without causing any damage. In deeper water Wells for semi-submersible platforms and FPSOs of the bit to gouge the rock and grind it into small
Platforms and
Gravity-Based Structures (GBS) depths, pipeline and subsea equipment may be safely are subsea wells drilled from MODUs. Additionally, pieces, or cuttings. Just as with digging a hole,
placed directly on the seafloor, below the potential subsea wells can be connected to other systems, those rock cuttings must be brought up out of
The first Cook Inlet platforms in Alaska, installed by
threat of ice keels. like Spars, FPSOs or platforms to extend the reach the way to allow the drill to go deeper. To achieve
Shell, placed the wells in large diameter legs that
to nearby reservoirs, allowing existing platforms this, a drilling fluid called “mud” is fed down the
prevented the tides from pushing sea ice into the

6 OIL AND GAS OFFSHORE PRODUCTION OIL AND GAS OFFSHORE PRODUCTION 7
 Directional Drilling

the future, may be drilled from this central location, hole from caving in, and acts as a foundation or
potentially extending the platform’s productive life. support for the rest of the well. Extra sections of
drill pipe are attached to lengthen the “drill string”
Directional drilling can also be used in places where to allow the well to be drilled deeper. At certain
it is not possible to position the rig directly over the intervals, due to changes in rock strength or pressure,
reservoir. It is now possible to start drilling on one the well must be protected by additional metal pipes
piece of land and cross under a body of water or even called “casing” that line the inside of the well and
a city to another piece of land to reach the reservoir. are sealed in with cement. Conventional drilling
One well on England’s southern coast was drilled starts with a large diameter hole at the Earth’s surface
horizontally underneath a village all the way to an that gradually gets smaller as each metal tube must
offshore field to preserve the area’s natural beauty. pass through the previous one. This typically looks
like an extended telescope or car antenna, only on
A motor on the rig called a “top drive” or a “rotary a larger scale. Today we are developing expandable
table” is usually used to rotate the drill pipe and tubes or casings that are narrow enough to pass
drill bit. In directional drilling, the bit initially digs through the initial casing but can then expand to
straight down and then it is turned a few degrees at match the diameter of the first, wider casing. The
a time to follow a designated path. In some cases, ability to maintain the same diameter hole from top
instead of rotating the pipe from the surface, a to bottom means we can tap reserves conventional
“downhole mud motor” is attached to the bottom of means cannot reach. The technology also allows us to
the pipe and the bit alone is rotated by the force of drill narrower wells, but recover the same amount of
the circulating mud. Directional drilling techniques hydrocarbons that would normally require larger wells.
are so accurate that targets of less than a few feet wide
can be hit, even from distances of several miles. Well Completion
Once the hole is drilled into the reservoir and the
Derrick and Hoisting final string of casing is cemented in place, tubing is
Managing all this heavy inserted in the casing to bring the oil and gas to the
work from above is surface. The tubing serves several purposes; it protects
a block-and-tackle the casing from corrosion and is easier to replace
system hanging than the casing if it does get damaged. The tubing
from a tall mast can be equipped with devices to control and monitor
drill pipe and into the bit, where it sprays through Directional Drilling erected on the the hydrocarbon flow and to stop flow completely
jets pushing the cuttings away. The mud and In the past, oil wells were drilled straight down platform. That in emergency situations. The special valves and
cuttings are forced up to the surface through a into the Earth. One of the greatest oil-industry “derrick” is the most fittings that control hydrocarbon flow and measure
space between the outside of the drill pipe and the advances is the ability to drill horizontally. This recognizable structure things like pressure and volume, called a “Christmas
inside of the hole. The mud is usually a mixture “directional drilling” allows the operator to reach in the industry and Tree,” may either be placed above the surface of the
of clays, additives and water that is very carefully many reservoirs from one drilling rig, maximizing can tower more than water or on the seafloor at the top of the well.
blended to ensure the best possible performance the amount of oil or gas that can be produced from 200 feet in the air. The hoisting system controls
in the existing conditions. The mud, which is also one location. A platform will occupy only a small the weight of the drill pipe on the bit, and Drilling Safely
used to cool the equipment, is then filtered to clean portion of the whole oil field, which can stretch raises the drill pipe in and out of the hole. A key safety mechanism called a “blowout preventer”
out the rock cuttings and circulated back through over many square miles. Directional drilling allows is installed on the top of the casing, or “wellhead,”
the pumps and into the drill pipe once more. wells to extend out from a central platform into Casing while drilling. Under normal drilling conditions,
multiple reservoir locations like a system of tree When a well is started, or “spudded,” sometimes a hydrocarbons are prevented from flowing out of the
roots. This allows the installation of fewer platforms guide base of metal pipe or “conductor” is set into reservoir by the weight of the drilling mud, which
and means that additional reservoirs, identified in the seabed. This positions the drill bit, prevents the counterbalances the reservoir pressure. If for some

8 OIL AND GAS OFFSHORE PRODUCTION OIL AND GAS OFFSHORE PRODUCTION 9
 Well Casing

Subsurface safety valve

Up to 150 feet

Subsurface safety valves are located in all well bores approximately 300 feet
below the seafloor that will automatically close to isolate the reservoir and
prevent the oil and gas from escaping into the environment.

reason this balance is lost, the blowout preventer eventually yields products such as gasoline, jet fuel, Production Processing
Once at the surface, production from the well is sent to
ensures the safe containment and flow of any heating oil, butane, propane, diesel and asphalt. Extraction a separator to be divided into its base components —
pressurized fluids that might otherwise erupt and cause Crude oil is composed of molecules containing
The oil, water and gas sometimes travel from the oil, gas and water. The oil is dehydrated in a bulk oil
an uncontrolled release of hydrocarbons. Gone are the carbon and hydrogen atoms. Natural gas, water,
reservoir to the surface under their own pressure treater before being sent to storage. It is then exported
days of those “gushers” — the fountains of oil that sediment and other impurities are usually mixed
(natural drive). If reservoir pressures are low, via a crude oil pipeline or a shuttle tanker to a refinery.
once shot into the skies from the wooden derricks of with the oil and gas as it comes out of the ground
however, artificial lift is employed. Artificial lift can The gas is also dehydrated before it is compressed and
yesteryear when blowout preventers were not available and must be removed prior to transporting it to
be in the form of in-well or seafloor pumps and is exported by pipeline. In some cases, injection wells are
or commonly used. market. Crude oil runs the gamut from heavy
sometimes accompanied with in-well heating and/or drilled to store gas safely in a reservoir for potential
molasses-type mixtures to fluids similar to cooking
gas lift systems. Some reservoirs contain heavy oils production in the future. The produced water is
Petroleum Varieties and Products oils. How easily an oil flows has a direct impact on
that require artificial lift. The cold temperatures in cleaned to required levels and then, depending on
Crude oil is a liquid that comes from reservoirs the design of the gathering and processing system.
deepwater or in the Arctic also play a role in how the location, may be discharged overboard, pumped
below the Earth’s surface. The term “crude” is used well the oil flows. Sometimes water or produced gas into a disposal well or injected into the reservoir
because the liquid has yet to be processed or refined is injected into the reservoir to maintain pressure as a pressurizing system for further oil recovery.
into consumer products. The refining process and force oil toward the production wells.

10 OIL AND GAS OFFSHORE PRODUCTION OIL AND GAS OFFSHORE PRODUCTION 11
 Production Drilling Basics

Safe Operations — Living and Extensive fire and safety systems are installed
Working Offshore throughout the platform, including equipment that
The crew size on an offshore platform can range automatically shuts down oil and gas production
from 10-15 for small, near-shore facilities, to as many in the event of an emergency. Every crewmember
as 150-200 members for larger operations. The living on the platform is authorized to shut down the
quarters include a cafeteria-type kitchen, recreation platform should they detect an unsafe condition. The
and exercise rooms, medical facilities, laundry rooms, shut down system is required to halt all production
maintenance shops, warehouses and laboratories. The within 45 seconds. Valves are used to isolate the
operations are continuous and require coverage by day various systems and minimize environmental
and night crews, who live on the platform during their impact should any system problem be identified.
entire time offshore. Typically one crew works on the Subsurface safety valves are located in all well bores
platform for a 14-day stretch, while another enjoys approximately 300 feet below the seafloor that will
their 14 days off at their homes, many pursuing side automatically close to isolate the reservoir and prevent
jobs or hobbies. the oil and gas from escaping into the environment.
Should evacuation be necessary, the crew has a
number of options ranging from helicopters, boats,
survival capsules and life rafts. In arctic regions,
specialized vehicles that can travel across ice or
water are provided to carry the crew to safety.

12 OIL AND GAS PRODUCTION OIL AND GAS OFFSHORE PRODUCTION 13

Glossary
Casing – steel pipe placed in an oil or gas well to prevent the MODU – Mobile Offshore Drilling Unit often used in conjunction with
wall of the hole from caving in, to prevent movement of fluids semi-submersibles and FPSOs, which do not have drilling rigs.
from one formation to another and to aid in well control.
Petroleum – a substance occurring naturally in the earth in solid, liquid, or
Christmas Tree – the control valves, pressure gauges, and gaseous state and composed mainly of mixtures of chemical compounds of
chokes assembled at the top of a well to control flow of oil carbon and hydrogen, with or without other nonmetallic elements such as
and/or gas after the well has been drilled and completed. sulfur, oxygen and nitrogen. In some cases, especially in the measurement
of oil and gas, petroleum refers only to oil — a liquid hydrocarbon — and
Derrick – a tapered mast of open steel framework used in does not include natural gas or gas liquids such as propane and butane.
drilling to support the drill string and other equipment. For this document the terms “hydrocarbons,” “petroleum” and “oil and gas”
are interchangeable.
Directional Drilling – the deviation of a well hole from a
vertical drilling angle. The method allows the operator to reach Platform – the structure that supports production and drilling operations.
many reservoirs from one drilling rig, maximizing the amount The types of offshore platforms can be either floating or fixed, depending
of oil or gas that can be produced from one location. on the location, water depth, climate and the facility’s size.

Gravel Island – a man-made construction of gravel used as a platform Rig – the drilling equipment used to drill the well that can
to support drilling rigs and oil and gas production equipment. either be installed on a platform or a MODU.

Hydrocarbons – organic chemical compounds of hydrogen and carbon Spud – to begin operations on a well.
atoms forming the basis of all petroleum products. They may exist as gases,
liquids or solids. An example of each is methane, hexane and asphalt. For Well Completion – the process of preparing a well for the production
this document the terms “hydrocarbons,” “petroleum” and “oil and gas” are of oil and gas in which one or more flow paths for hydrocarbons
interchangeable. are established between the reservoir and the surface.

Sources
• American Petroleum Institute • Schlumberger Oilfield Services

• Baker, Ron, A Primer of Offshore Operations, University of Texas at • Society of Petroleum Engineers
Austin, 1998
• State of Alaska Dept. of Natural Resources Division of Oil and Gas
• Encyclopedia Britannica
• The Learning Space (http://openlearn.open.ac.uk)
• General Maritime Corporation
• The National Ocean Industries Association
• Oil and Gas UK
• United States Maritime Administration
• Natural Gas Supply Association
• U.S. Minerals Management Service,
• Sakhalin Energy Drilling Supervisors Department of the Interior

OIL AND GAS OFFSHORE PRODUCTION 15

Shell in Alaska To find and develop commercial
hydrocarbon resources in the Chukchi
and Beaufort Outer Continental Shelf.
To support communities where we
operate in benefiting from any potential
offshore activities economically
and socially. To respect the way of
life of the residents of Alaska.
 4
CHAPTER Four:

Transporting
oil and gas

www.shell.us/alaska
 Excavator digs a trench for laying a pipeline.

What’s in a Barrel of Oil?

Early producers shipped their oil to market in earthenware vessels aboard slow-moving barges.
Since then, the need to move increasingly large quantities of petroleum* has brought about some
big changes in the industry. As containers evolved, the 42-gallon oil barrel became the current U.S.
standard for measurement, though it is no longer used for shipping. The unit originated in the 1860s,
when there was no standard measure for oil. Producers simply used whisky and molasses barrels
or whatever was handy until customers demanded something more uniform. The most common size
cask — 42 gallons — became the agreed-upon standard. As U.S. oil companies became active in
other countries, many of them also adopted that standard as well. For much of international trade,
however, the common unit is the metric ton, which is approximately 7 U.S. barrels.

Beyond the Barrel Pipelines Pipeline designs vary depending on what they are propane are recovered, they are sent to other plants
When barrels proved too leaky and expensive, Once the offshore transporting – crude oil, natural gas or refined for further processing or directly to the market.
producers began looking for other shipping methods. facility has separated products – and their function. The world’s longest Almost all overland natural gas transportation is by
The first U.S. oil pipeline was constructed in 1865. the oil and gas, it sends underwater pipeline is the Langeled project, which pipeline. Transporting it by truck, train, or barge
It ran just five miles through western Pennsylvania, them to refineries and was completed in 2007 to transport natural gas would increase safety risks and be more costly.
but it revolutionized the transportation of petroleum. processing plants on some 750 miles from Norway to England. Water
depths of over a half mile, extremely uneven terrain
The maiden voyage of the first oil tanker 15 years land. Most offshore oil Designing Safe Pipelines
later was another significant advance because oil and gas production is and freezing temperatures make the Langeled
something of a modern wonder. But as more Pipeline design must take into consideration a
could now be pumped directly into the ship’s hull transported by pipelines
than a third of the worldwide growth in drilling number of issues including the volume of oil or
without the containers’ extra cost and bulk. Today, to onshore facilities.
is expected to come from offshore, technological gas to be transported, the soil strength and stability
nearly 200,000 miles of petroleum pipelines crisscross The technique for
A diver inspects an underwater pipeline. of the seafloor, environmental conditions such as
the United States, moving two-thirds of the nation’s laying pipelines under advances in pipeline construction and safety are
accelerating, making them the safest, most efficient water depth, temperatures, marine life and other
crude oil and refined products. It is the world’s water had its beginnings in England during World
and economical transportation mode available. activities in the area such as shipping and industrial
largest energy pipeline network — 10 times larger War II. Steel tubes were welded together and coiled
operations. Companies are responsible for the safety
than Europe’s. Modern oil tankers include enormous around floating drums. One end of the pipe was
and reliability of their pipeline systems and they are
supertankers, which can carry 2 million barrels of fixed to a terminal point and as the floating drums Oil vs. Gas rigorously audited and inspected by a host of agencies.
crude oil. That’s enough oil to meet 10 percent of were towed across the English Channel, the pipe was Crude oil is generally piped from the offshore
U.S. energy needs for one day, or produce enough pulled off the drum. The pipeline connected fuel production site to an onshore terminal with large
gasoline to drive a car 31,000 times around the Earth. supply depots in England with distribution points in storage tanks and then sent to refineries in pipelines
Europe to support the Allied invasion of Europe. over land. Natural gas is transported to gas plants for
processing. Once components such as butane and
* The terms “petroleum,” “hydrocarbons” and “oil and gas” are often used interchangeably throughout this text. For definitions and distinctions, refer to the glossary at the end of this chapter.

2 Transporting oil and gas Transporting oil and gas 3

 The Pipe Other Pipeline Route PipeLines in Arctic Conditions
The diameter must be large enough to allow the Considerations
maximum volume to pass with the minimal resistance Sometimes these site surveys have uncovered some
Pipeline Routes vessels are used to weld and install the pipelines or,
for optimal efficiency. The velocity must also be kept surprises — like shipwrecks and archeological
Surveying potential pipeline routes in the Arctic in some rare occasions, the pipelines are constructed
high enough to keep the pipe free of corrosion or sites. Spanish Galleons, World War II ships and
means looking for ice gouges and strudel scours. on land, moved into the water and towed to location.
debris that can plug the pipe. The pipes are usually other artifacts have been found while ocean
made of high-quality carbon steel that is produced to Ice gouging can occur when ice ridges are pushed
bottoms were being surveyed for pipeline
specific standards, tested and quality checked from routes. These finds are brought to local historical toward shore and their ice keels contact the seafloor. Trans-Alaska Pipeline System
its raw steel state to the finished product. Generally, societies for investigation and the pipelines are The gouges indicate where pipelines must be buried
The Trans-Alaska Pipeline System (TAPS) transports
the pipes or joints are manufactured in approximately then routed around any sensitive areas. to protect them from the ice keels. Strudel scours are
all North Slope oil production from current fields, like
40-foot lengths. Pipes transporting certain types formed during the spring melt, when fresh water from
Prudhoe Bay and Kuparuk, to the southern port of
of fluids must contain special corrosion resistant local stream and river breakups flow over the sea
alloys. Heavier (thicker) oil may need to be heated
Pipeline Installation Valdez. From there, the oil is shipped by tankers to
ice. This water finds seal breathing holes or cracks
refineries on the U.S. West Coast. Construction on the
to keep it flowing easily. Depending on the distance Once manufactured, the pipe is coated to protect in the ice where it can drain into the water below.
800-mile long, 48-inch diameter pipeline was started
the fluid needs to travel, the pipeline may need to it from corrosion and may have special insulation These drains can create whirlpool actions that scour
applied before it is shipped to the installation site. in 1975 and completed in 1977. It was considered
be insulated or equipped with additional pumps the seafloor and could expose pipelines. The surveys
Pipelines can be installed by a number of methods an engineering and construction marvel, passing
or heating stations to keep the product flowing.
are performed over several years to determine the
depending on the site conditions. Barges and other through extreme climates and environmentally
frequency and depth of the gouges and scours as
types of vessels are often used to construct and lay the sensitive areas.
The Route pipelines. “Lay barges” are equipped like small factories
conditions change annually.
Pipeline routes are selected to allow safe to weld the pipes together and then lower them to the Designed to transport up to 2.1 million barrels of
operation over the life of the pipeline. Surveys seabed one pipe or joint at a time as the vessel slowly Pipeline Installation crude oil daily, TAPS carried only about 700,000
are conducted to gather data on the seafloor moves ahead. It is critical that each weld be inspected In the Arctic, pipelines are often installed from barrels a day in 2008 due to production declines.
terrain, soil properties and environmental events using X-ray and/or ultrasonic techniques to ensure a equipment situated on the surrounding ice during There are opportunities to develop new onshore and
such as currents and ice movements. The data is proper weld and the integrity of the pipeline system. winter construction. Extended reach backhoes offshore fields on the North Slope that could slow or
then used to select routes with the most stable For burying the pipelines, specialized equipment is are used to dig trenches in the seafloor where the even reverse that decline. Oil production from future
conditions to ensure the lines will be safe. used to dig a trench and then cover the pipeline. The pipeline is to be buried. This method works for developments may connect to TAPS to take advantage
trenching methods vary depending on how deeply shallower waters near the shore. In deeper water, of the existing infrastructure.
it must be dug, the water depth and strength of the
Seafloor Conditions
seafloor soils. The trench may be dug before the line
In most environments, offshore pipelines can lie on is laid down and/or the trench can be dug around a
the seafloor, protected by the water covering them. pipeline sitting on the seabed. The seafloor may be
Even during hurricanes, pipelines see limited effects plowed, jetted with pressurized water or trenched with
from the massive waves on the surface, though they a machine that resembles a large-slow-speed chainsaw.
must still be designed to withstand strong subsurface
Pipeline Operations detect any early signs of abnormal conditions
currents and tidal surges. In some areas, pipelines must The final phase of pipeline installation is to conduct or events. If an irregularity is detected, support
be buried to protect them from near-shore wave forces, Pipeline systems are typically operated remotely
a hydrostatic test, a check on system integrity while personnel are alerted to take appropriate action.
ship anchors and commercial fishing activities. In the from centralized control centers. These centers
under pressure. Water is pumped into the pipeline and
Arctic, burial may be required in some areas because of use state-of-the-art control and communications
then pressurized to a minimum 1.25 times its design
ice and environmental conditions and surveys of the systems to monitor and control every aspect of the Pigging the Line
pressure for an extended period of time. Once this final
ocean bottom are conducted to identify those areas. pipeline system, including starting and stopping Pipelines are maintained and inspected using a
testing has determined that the system is sound, the
pumps, opening and closing valves and monitoring “pig,” a tool that can be inserted in one end of the
water is removed and the pipeline is set for operation.
temperatures, pressures and flow rates. Computers pipeline and pushed by the fluid to the other end.
are also used to help monitor the systems and The most basic pigs are used to clean the inside of

4 Transporting oil and gas Transporting oil and gas 5

Pipeline Technology
Tanker Technology
and operations
Pipeline Technology and operations
Tanker Technology
Tanker Technology
 Tanker Capacities
Glossary
the pipes; highly-complex “smart pigs” can inspect
the condition and thickness of the pipeline.
New sources and rising demand for oil and gas during
the last half of the 20th century meant shipping larger
Leak Detection quantities for longer hauls. To make long-distance Barrel – 42 U.S. gallons. Pig Traps – This device, also know as scaper traps or launchers or

All pipelines are monitored with some kind of leak transportation more cost effective, producers also receivers, is where pigs are inserted or removed from the system. After its
Crude Oil – The basic raw material pumped from the earth. There are insertion and after normal flow of oil and gas is restored, fluids carry the
detection system. The most common method uses wanted to use the largest carriers the ports could many different grades of crude, each containing various vapors, liquids pig through the pipeline.
computers and software to assist the pipeline operator. manage. Ultimately, tanker manufacturers developed and solids. This crude is changed at a refinery into products.
Pipeline System – All parts of the physical facilities through which oil is
One type, called “mass balance,” measures the amount supertankers, or “very large crude carriers (VLCCs),” Hydrocarbons – organic chemical compounds of hydrogen and carbon transported, including line pipe, valves, pumping units, metering stations
of oil going in the pipeline and the amount coming that measure up to four football fields in length. atoms forming the basis of all petroleum products. They may exist as gases, and tanks.
liquids or solids. An example of each is methane, hexane and asphalt. For
out. Another method called “real-time transient this document the terms “hydrocarbons,” “petroleum” and “oil and gas” are Strudel Scour – The formation on the seafloor caused during the spring
modeling” compares actual measured data with Innovations have made larger tankers more fuel interchangeable. melt, when rivers overflow existing ice. Cracks and seal breathing holes

computer models. In both these methods, if the efficient than smaller vessels. Though it requires allow the water to flow through the ice, causing a circular draining action
Mass balance – A leak detection method that measures the amount of that can scour the seafloor and create unsafe conditions for pipelines.
results are outside normal operating limits, an alarm more energy to power a larger ship, it takes less oil going in the pipeline and the amount coming out and then compares

alerts the operator to take appropriate action. New power to deliver each barrel of oil at the same that to a rate generated by computer modeling. If the actual rate differs Smart Pig – An electronic internal inspection device placed inside the
from the computer modeling rate, an alarm alerts the operator to take pipeline to provide data about the condition of the pipeline, such as
methods are also being developed that use equipment speed. For example, 16,000 horsepower are
appropriate action. measuring dents or locating corrosion.
or sensors to supplement computer systems. needed to drive a 420,000-barrel ship, but 42,500
horsepower can propel a 1,820,000-barrel tanker. Petroleum – a substance occurring naturally in the earth in solid, liquid, or Trunk Line – A main pipeline.
gaseous state and composed mainly of mixtures of chemical compounds of
That’s more than four times the cargo moved carbon and hydrogen, with or without other nonmetallic elements such as ULCC (Tanker) – ultra-large capacity carrier.
Tankers with only 2.5 times the power requirement. sulfur, oxygen and nitrogen. In some cases, especially in the measurement
VLCC (Tanker) – very large capacity carrier
of oil and gas, petroleum refers only to oil — a liquid hydrocarbon — and
Offshore pipelines are more expensive and difficult to does not include natural gas or gas liquids such as propane and butane.
build than onshore pipelines, and if the oil and gas Oil tankers are divided into six major categories For this document the terms “hydrocarbons,” “petroleum” and “oil and gas”
field is small, it may be uneconomical to use them. based on how much they can carry. Cargo capacity are interchangeable.

In some areas, long distances or unstable seafloor is measured in dead weight tons (DWT) a unit that
conditions may make it impractical or impossible to equals 2,240 pounds. Ultra-large crude carriers
lay pipelines. Instead, tankers can be used to transport (ULCCs) and VLCCs are the largest vessels and can

Sources
the oil to shore. If liquefied using special processing carry 200,000 DWT or more for long hauls. The
equipment, natural gas can also be shipped in tankers mid-size Suezmax and Aframax tankers ship cargos
from one port to another. Special regasification of 120,000 to 200,000 DWT and travel both long
facilities at the receiving port then return the liquid to and medium distances. The smallest vessels are
• ABS (www.eagle.org) • Schlumberger Oilfield Services
its gas form for cross-country shipment by pipeline. Handysize and Panamax tankers, typically used for
• Association of Oil Pipelines • Society of Petroleum Engineers
short hauls with cargos of 10,000 to 80,000 DWT.
• Energy Information Agency (US Department of Energy) • State of Alaska Dept. of Natural Resources Division of Oil and Gas

FPSOs • General Maritime Corporation • The Learning Space (http://openlearn.open.ac.uk)

Floating production storage and offloading (FPSOs)

Transport Safety • Natural Gas Supply Association • The National Ocean Industries Association

Safety measures have seen significant advances, • Occupational Safety & Health Administration • United States Maritime Administration
units are usually used in combination with tankers.
Like other types of production platforms, FPSOs including safe tank venting, sophisticated engine • Pacific L.A. Marine Terminal LLC (www.pacificenergypier400.com)

separate the oil, gas and water, and store the oil room control systems and satellite navigation.
until tankers transport it to refineries. Gas from One of the most important changes is the double-
FPSOs is usually reinjected into the reservoir to hull design, a spill prevention measure that
produce later, or it is transported via pipeline became mandatory in the early 1990s following
to the shore for further processing and sales. the Exxon Valdez oil spill. All single-hulled
tankers will be phased out worldwide by 2015.

10 Transporting oil and gas Transporting oil and gas 11

Shell in Alaska To find and develop commercial
hydrocarbon resources in the Chukchi
and Beaufort Outer Continental Shelf.
To support communities where we
operate in benefiting from any potential
offshore activities economically
and socially. To respect the way of
life of the residents of Alaska.
 5
CHAPTER Five:

Shell In
Offshore Alaska

www.shell.us/alaska
SHELL IN OFFSHORE ALASKA 1
 Butchering a whale caught
off the coast of barrow, alaksa

Shell in Offshore Alaska

Shell has a long history in Alaska, an association that began more than 90 years ago when our
geologists took their first look at the region’s potential for oil. For some 50 years, Shell operated
continuously in Alaska, as a major producer in Cook Inlet, and one of the most prominent explorers in
the state’s frontier basins. We were responsible for drilling exploration wells in both the Beaufort and
Chukchi Seas in the 1980s and 1990s.

Today, Shell is returning to Alaska to search for the plan how to move forward with each phase, from Seismic Surveys
vast untapped oil and gas reserves that are believed exploration to development and production. This intensive process covers all areas that may One of the first steps in exploring for oil and gas
to lie offshore. This promising new venture means be affected by oil and gas exploration, using is to conduct seismic surveys. Shell completed
the potential of a long-term partnership with Alaska, independent, government and industry scientists. seismic programs in the Chukchi in 2006, in both
Exploration Phase
one that requires us to inform and engage with The MMS process is subject to review by state and the Beaufort and Chukchi Seas in 2007 and 2008,
residents of local communities and other stakeholders. Offshore Leasing, Permitting local government agencies. Shell not only meets all including the first-ever 3-D seismic conducted in
Successful operation in Alaska’s challenging conditions and the Environment the requirements for responsible Arctic exploration, those waters. Seismic surveys, the best pre-drilling
need to incorporate traditional knowledge of the Shell re-entered Alaska in 2005 with the purchase but in many cases, we exceed those standards. exploration tools available, send pulses of sound to
region, and consider the needs and concerns of of offshore leases in the Beaufort Sea. We purchased the seafloor to map the subsurface structures in order
the communities where we will work and live. additional Beaufort Sea leases in 2007, then Shell continues to work closely with stakeholders, to obtain an accurate view of potential oil and gas
acquired leases in the Chukchi Sea in 2008. local communities, the MMS and other regulatory accumulations. As a result, fewer wells need to be
Shell believes offshore activities can co-exist agencies. We have listened to concerns about drilled in the search for hydrocarbons. The surveys
successfully with the Inupiat way of life. As with For exploration leases, energy companies are scale and pace of development and have adjusted also help in the development and production phases.
our operations worldwide, Shell seeks to provide required to submit their plans to the Minerals our plans accordingly. In addition, our drilling The data on the subsurface conditions is also used
benefits for Alaska and its local communities Management Service (MMS) for environmental objectives have become more focused with the to determine the safest and most efficient drilling
including financial gains, such as increased revenues, review prior to approval. To operate in Alaska, acquisition and analysis of additional seismic data. techniques and well designs for those operations.
new jobs and more business for local enterprises. which has some of the world’s most stringent We continue to welcome rigorous scrutiny and
Making the most of these opportunities and addressing environmental standards, companies also need believe it plays an important part of earning the trust Seismic Sounds and Marine Life
local concerns effectively means our dialog must begin to obtain more than 35 major permits — most of the communities near areas in which we work. In more than three decades of worldwide offshore
early in the process, and continue as we carefully of which must be applied for annually. seismic surveying, there is little evidence to suggest
that sound generated by seismic exploration resulted

2 SHELL IN OFFSHORE ALASKA SHELL IN OFFSHORE ALASKA 3

 3-D Seismic Survey in the stranding, injury or mortality of marine have both the authority and responsibility to direct
mammals. In Alaska, offshore seismic activity and the vessel to initiate avoidance measures, which may
marine mammals have co-existed for just as long, include reducing or ceasing operations of a moving
and during this time, the Bowhead whale population vessel when an animal is sighted within a specified
has increased steadily at about 3 percent per year, “safety zone.” In addition, seismic operations begin
whether or not seismic activities occurred. with “soft-starts,” where the seismic source is slowly
brought to full power over the course of about 30
The seismic sound pulse is carefully designed to minutes to avoid startling marine mammals and
send its sound waves downward to decrease the allowing them to move away. During offshore
potential for sound traveling in the water. While operations, Communication and Call Centers allow
this lessens the sound traveling in the water, there for monitoring of any potential interaction between
is some overlap with the hearing range of some industry operations and subsistence activities.
marine mammals. Therefore, Shell uses modeling
and measurements of the seismic source to Shell’s extensive research in the Alaskan Arctic
determine how far different levels of sound travel includes a network of seafloor acoustic recorders and
from the operating vessel, which could potentially sophisticated software that surveys marine mammal
be detectable by marine mammals and cause them migration patterns. Acoustic methods provide a much
to respond. Shell continues to work to include larger number of detections than the more common
traditional knowledge into our ongoing activities. aerial surveys because they can operate day and night
in harsh weather and ice conditions. This is just one
Shell is working closely with local marine mammal of Shell’s many studies in Alaska’s northern waters
observers and independent scientists to better that seek to collect additional data for environmental,
Seafloor understand the effects of sound from our operations social and economic conditions to assess the potential
and what measures will best minimize the impact. effects of our operations as we move forward and help
further define mitigation measures where applicable.
A significant amount of knowledge has been gained
from a large network of buoys that record the sounds Exploration and Appraisal Drilling Rigs
Objects are not shown to scale
of whales, seals, and walrus as well as seismic noise. Data from seismic and other surveys can indicate the
This helps to understand the distribution, abundance, best prospects for oil and gas reserves, but the only
and migration routes as well as possible marine way to be sure is to drill. Offshore exploration wells
Marine mammal observation Noise reduction Marine life research mammal behavior changes in response to petroleum are typically not intended to bring oil to the surface.
• When and where it’s safe, aerial overflight Seismic activity begins at minimum noise levels and Research on marine life migration routes and timing is
surveys are used to verify and confirm that is ramped up gradually so marine life will depart the woven into the operations. industry activities. Instead, these wells determine if hydrocarbons are
concentrations of marine mammals are not immediate area before the equipment is fully powered
up. Studies have shown fish and marine mammals
actively using critical resources within the area
that may be impacted by Shell operations. return to the area within hours after the noise ceases.
present and whether the quantity and quality of
• Rigorous visual monitoring is conducted onboard
Preliminary findings suggest that while Bowheads do the hydrocarbons are sufficient to move ahead with
each vessel by trained marine mammal observers
(MMOs) at all times during periods of activity.
change their behavior in active seismic areas, they are development. Additional appraisal wells are drilled
MMOs continuously scout for marine mammals
and instruct the captain of a moving vessel to shut only temporarily deflected off course and return to around these sites to estimate the boundaries of
down if they observe marine mammals within a
pre-determined safety zone around the vessel. their migration course within a few kilometers. the field and define reservoir and fluid quality.

Protecting Marine Mammals For our exploration program in Alaska, we plan to use
The best way to protect marine mammals from a floating drilling rig for our prospects. These mobile
man-made sound is, of course, to limit contact with units can also be easily moved off location in the event
them. Some of the measures Shell employs to achieve of hazardous ice conditions. The objective is to avoid
this include posting marine mammal observers rather than to resist ice forces for temporary operations.
aboard all drilling-related vessels. These observers

4 SHELL IN OFFSHORE ALASKA SHELL IN OFFSHORE ALASKA 5

 Floating Arctic Exploration Rigs DRILLING RIG drilling vessel (including the time required to secure Exploration Drilling Discharges
One option is a drillship, which has been adapted to the well and disconnect the drill rig if needed). As exploration wells are drilled, drilling mud and
work in ice with a specially strengthened hull. The rock cuttings are brought to the surface. Of the
vessel is designed with a turret mooring system, which Real Time Operation Centers (RTOC) 30 exploration wells previously drilled by the
allows it to rotate, or “weathervane,” into the ice loads, Shell utilizes RTOCs to monitor the drilling of industry in Alaska’s Beaufort Sea, five wells in
breaking up the ice like a knife cutting through bread. all critical wells within our portfolio throughout the Chukchi Sea and more than 90 wells in the
The drillship can operate in first-year ice about two-feet the world. The centers employ highly experienced Canadian Beaufort, all but one discharged mud
thick, and will be supported by one or more arctic-class and trained subject matter experts to continuously and cuttings to the ocean. The one exception was
icebreakers that can clear ice out of the way, if needed. observe drilling operations from state-of-the-art drilled from a gravel island, which followed onshore
detectors inside the well and on the drilling rig to practices because of its nearshore location.
Exploration Drilling Layers of Prevention transmit data using advanced satellite telemetry.
Drilling effectively during the exploration phase The technology incorporated into the RTOCs Shell’s drilling mud uses water as the base fluid with
means not only discovering a promising reservoir, includes subsurface visualization, well engineering natural clays, polymers and other environmentally
but also doing so safely in order to protect the well calculations and modeling, problem identification, friendly chemicals that can be found in products such
and the environment. The primary safety measure for and intervention using information that is less as cosmetics. These additives control the viscosity
drilling is well control, maintaining the balance of well than 1/2 second old, essentially in real time. These (thickness) and density (weight) of the fluid to help
pressures to prevent a blowout — the uncontrolled centers can detect slight deviations from expected balance pressures and maintain well control.
release of hydrocarbons. Shell has more than one norms including abnormal pressures or the influx of The additives meet Norway’s regulatory requirements,
hundred years of drilling experience, including nine hydrocarbons near the drill bit. Advice on changing the most stringent in the world, which requires
operations in the Arctic and arctic-like regions, drilling parameters can be sent from the RTOC them to result in “no harmful discharge.” All Shell’s
and we have developed a multi-layered prevention back to the drilling rig — including shutting down discharges to the ocean comply with the National
plan to give confidence that the failure of any single operations immediately if necessary — all from a Pollution Discharge Elimination System permit
system or device will not result in a blowout. remote location. The RTOCs tied to the Alaska for the Arctic granted by the U.S. Environmental
project are located in Houston and New Orleans. Protection Agency. These discharges must meet a
These layers include: By using such technology, we add redundancies “no sheen” (no oily film on the water) standard,
in checks and balances, making it possible to and they are rigorously tested on highly sensitive
• Proper planning, training and risk identification; operate more safely and responsibly by preventing marine organisms. The testing has been conducted
incidents, therefore becoming more pro-active. by a wide array of scientists over two decades of
• Continuous monitoring;
detailed studies. In addition, the weight of evidence
• Early problem detection and response; Ice and Weather Forecasting from international laboratory and field studies have
• Mechanical barriers to prevent loss of control; and During drilling operations, Shell will use one of the led government experts and scientists to conclude
nation’s most advanced ice and weather forecasting that water-based mud and cuttings do not harm the
• Contingency planning for loss of control.
systems backed by scientists, meteorologists, environment, marine mammals or local communities.
(See Chapter 6 for more on blowout prevention.) and sophisticated modeling and data-gathering Shell continues to work closely with stakeholders on
tools. Ice and weather predictions are updated discharge, which we know is a key concern to them.
Critical Operations Curtailment Plan (COCP)
continuously with feedback from the drill site,
The COCP is a rigorous set of procedures that
satellite imagery and the use of radar on the rig
anticipate hazards, usually from moving ice and
that is specifically tuned to track ice movement. Ice
Development and
severe storms, and avoids risks by making the well
observers are aboard all drilling-related vessels and Production Phase
safe before a threat arrives. The plan requires that
report on the size and behavior of any threatening Offshore structures and Ice Forces
certain operations are not started unless the weather
ice forces that could affect drilling operations. Should our exploration for economically developable
forecast is validated, appropriate equipment is in good
hydrocarbons prove successful, we will move into
working order, and the time necessary to execute the
development and production. It is important to note
specific phase is available before any threat reaches the
that it can take up to 10 years after first exploration

6 SHELL IN OFFSHORE ALASKA SHELL IN OFFSHORE ALASKA 7

 activities begin to start the production phase. Shell Production Drilling and Operations offshore, but also be in line with the North Slope’s Alaska. During our operations in the arctic waters off
has extensive experience in analyzing local conditions Once the platform is in place, Shell would drill onshore and nearshore practices. Shell anticipates: Russia’s Sakhalin Island between 1999 and 2006, we
as well as designing and constructing structures production wells with a permanent rig located produced nearly 95 million barrels of oil, spilling only
to meet ice conditions. Shell understands the on the platform. Today’s drilling technique, • Disposing of mud and cuttings into the 2.12 barrels. There have been no significant (greater
Alaskan Arctic’s unique conditions and continues named “directional drilling,” allows us to tap subsurface; than 1000 barrels) OCS well blowouts in more than
to gather data to further that understanding. We into multiple reservoirs located a distance from • Disposing of treated gray and black water 30 years or platform spills in more than 28 years. Even
are building on what we have learned from our very a platform. Because the drill bit can be guided (sewage and other domestic waste) into the with these statistics, our industry has made significant
first platform in Cook Inlet in 1964, to the gravel in different directions, wells no longer have to subsurface; and improvements in spill prevention in the past 30 years,
islands and steel drilling structures used off of the be drilled straight down into the reservoir. This with prevention and response capabilities that in the
North Slope in the 1980s and, most recently, the • Disposing of produced water back into the rare event of a spill make it very unlikely there would
optimizes production and reduces the impact on
integrated platforms off Russia’s Sakhalin Island. producing reservoirs. be significant impact on the surrounding environment.
the environment by requiring fewer platforms.
The reason why discharges are handled differently While an accidental spill from Shell’s activities in
Platforms for developing hydrocarbons in Alaskan Production wells will have barriers in place, between exploration and production wells is that Alaska is extremely unlikely, we take the consequences
waters will be engineered to withstand ice forces, similar to exploration wells, to prevent the loss of during exploration operations, there is usually of any potential incident seriously. As Shell moves
including rapidly moving multi-year ice and ice control, including the use of drilling mud, casing, one well drilled from a location with no water forward with our offshore planning, our oil spill
ridges. Understanding the strength of sea ice and early detection and response technologies, and produced. Production operations, however, involve prevention and response (OSPR) strategy is a
how it might interact with a structure is critical to blowout preventers. Accidents during production many wells from a single location that can produce top priority. Shell, along with five other energy
safe platform design. The construction materials drilling are even more unlikely than in exploration a larger amount of cuttings and produced water companies, have joined together for the “Oil in
must be stronger than the ice pushing against them. operations because the well designs are based from the oil-bearing formations. Produced water Ice” research and development project which aims
The soil strength at the seabed is tested to help on the additional information obtained during is water that has been in the reservoir for millions to further enhance methods and equipment for oil
design foundations to resist ice forces and prevent exploratory drilling. In the unlikely event that of years and then is produced along with the oil. spill response in arctic and ice-covered waters.
the platform from moving. The process is similar to uncontrolled hydrocarbons threaten to reach the
the way dams and tall buildings are engineered. surface, the well may be capped or, in extremely Logistics Shell already has state-of-the-art OSPR capabilities
Ice scientists and material engineers will conduct rare situations, a relief well would be drilled. Production platform re-supply and other logistics specially designed for Alaska offshore exploration.
many tests to ensure safe platform design, including: will require careful planning to ensure the availability We are building on our experience in nine Arctic
For platform operations, processing facilities are used of supplies, the readiness of emergency and rescue and arctic-like regions around the world, where
• Field experiments on ice floes; to separate the oil, gas and water produced from the operations, and minimal impact to subsistence lifestyle the climate can pose significant challenges to
• Measurements and analysis on ice breaking wells. The oil is prepared for export while the gas is and animals. Transportation modes (helicopters, recovering spilled oil. Our OSPR teams also include
against the bows of icebreakers; used to power the platform. Produced water is treated vessels, etc.) and shore bases must be flexible and Native Alaskans and contractors who contribute
and cleaned for disposal. In some operations the water reliable. In addition to combining our existing their vital knowledge on how to cope with an
• Measurements of full-scale ice interactions with emergency in a broad range of ice conditions.
is re-injected to maintain pressure in the reservoirs. modes, Shell is developing new technologies in order
structures, such as those used in operations on
to mobilize personnel, equipment, materials and
Sakhalin Island;
Platform and Production goods. Some options include special vehicles such as Prevention
• Observations of interactions in nature, such as Drilling Discharges shallow draft supply vessels and air-cushioned vehicles.
multi-year floe interactions in the Arctic; Shell is working on initial platform designs Shell will obtain input from local stakeholders and Preventing SPILLS DURING Drilling

• Simulations of the interactions of waves, for production operations that will meet with will work with regulators to plan for development Oil spills of any kind are exceedingly rare in drilling
currents and ice with an offshore arctic the standards of “no harmful discharge to the in the event of success in the exploration phase. activities, but Shell has prepared and tested its plans
structure; environment.” Preliminary engineering work on for a broad range of conditions. Our multi-layered well
potential Alaska Arctic offshore developments control system ensures that the failure of any single
• Laboratory scale model tests to verify the
shows promising results regarding disposal of Oil Spill Prevention and system or device does not result in a blowout. This
calculations and computer simulations of
wastes into the subsurface. Shell will not only Response in the Arctic includes early detection and warning of any pressure
these interactions; and
meet federal standards for waste discharge in the At Shell, our goal is zero oil spills and our record and imbalances that could lead to a blowout, mechanical
• Advances in materials and technology have barriers such as blowout preventers (BOPs) that
experience give us an edge in meeting that goal in
produced state-of-the-art production platform
designs that can resist the harshest conditions.

8 SHELL IN OFFSHORE ALASKA SHELL IN OFFSHORE ALASKA 9

Reducing Impact to THE ENVIRONMENT
Piltun-Astokhskoye B
a fixed production platform 7.5 miles off
Sakhalin Island in 105’ water (2007).
Reducing Impact to THE ENVIRONMENT
 effectively contain well fluids and the ability to “kill,” Response fixed-wing aircraft, which were selected for their
or stop flow of, a well in the event of an emergency. capability to operate in the Arctic. All vessels, barges
Preparedness and response equipment have been designed to
No other company has ever deployed the immediate operate in varying weather and ice conditions. Our
Preventing Transportation-Related Spills
response resources in Alaska offshore that Shell has high-volume skimming systems were developed
Pipelines for our planned exploration drilling. Many operations specifically for cold climates and have a recovery
Pipelines are the preferred means of transporting oil use on-call spill response teams that could be hours capacity several times that of the regulatory standard

Courtesy of Judy Patrick Photography

and gas throughout the world. Pipelines already exist away from an incident. Shell’s advanced, ice-capable for worst-case discharge (WCD) scenarios.
in challenging Arctic and arctic-like environments vessels, equipment and crews are on an unprecedented
including Sakhalin Island, Siberia, Canada, the 24/7 standby for exploration drilling and are ready to
Norwegian North Sea and Alaska’s own Cook Inlet. Response Strategies
respond in less than one hour to any incident large or
Mechanical Containment and Recovery
small. Shell and its spill response contractors will stage
In the Beaufort Sea, Shell has conducted initial Mechanical recovery is a key component of oil
critical response equipment at key locations in the
seafloor surveys looking for potential hazards so spill response. This measure involves oil skimmers
area. Immediate assistance is also available from our
that we can map out pipeline routes and determine that collect oil at the water surface and transfer Deploying booms during training.
primary response contractors, trained Village Response
how deeply they may need to be buried to maximize it to a storage container. Skimmers are most
Teams (VRTs) and several contractors that maintain that can make other options challenging can increase
environmental safety. Shell uses the latest safety efficient in recovering thick layers of oil.
qualified teams for both offshore and nearshore the effectiveness of chemical dispersants. The mixing
monitoring advances, such as “smart pigs” that operations. Shell’s offshore exploration drilling will
Controlled In Situ Burning energy provided by breaking waves that hinder other
can travel along the lines checking for problems. begin after the nearshore fast ice has broken up,
Another option is to burn the oil off the water or ice. response operations can assist dispersants in breaking
Should hazardous conditions or problems occur, our predominantly during open water conditions from
In situ (Latin for “in place”) burning provides a unique the slick up into small particles that stay in the water
pipelines are fitted with shut-off valves throughout early July. However, because of the possibility of ice
way to eliminate oil quickly, efficiently and safely in column, which facilitates natural biodegradation.
so that in the event of a leak, each section of the incursions and the natural variability of freeze-up,
open water and in ice. Experiments have shown that Recent field tests in the Norwegian Arctic have
pipe can be sealed to avoid continuous discharge. we have designed our oil spill response strategies to
efficiency is often as high as 95-98 percent. On the demonstrated that oil in broken ice can be efficiently
This technology proved to be very effective during cover a broad range of water and ice conditions, and
average, about 80-95 percent of the oil is eliminated dispersed using propellers of the vessel to generate
devastating U.S. hurricanes, minimizing spills even we are continuing work on plans for an effective
as gas, with 1-10 percent remaining as soot and 1-10 artificial turbulence to help facilitate the process.
when whole sections of pipelines were compromised. year-round response for the production phase.
percent as a residue. The smoke and gases remain in
the air only briefly and are carefully monitored to Recovery in Arctic Conditions
Fuel Transfers
Oil Tracking and Weather Monitoring ensure the plume does not affect the communities or Shell’s OSPR planning provides specific strategies
Fueling vessels is a routine activity, but Shell has
In the unlikely event of a spill, Shell responders will people in the region. Burning has significant safety for operating in conditions from open water to a
exhaustive precautionary measures in place to prevent
immediately travel to the area to identify, map and advantages. Surfacing oil often releases large quantities broad range of ice concentrations. It also includes
any pollutants from escaping into the waters. Both
report the leading edge of any spilled oil. Helicopters of natural gas and igniting those volatile vapors will ice deflection and management tactics to enhance
the transferring and receiving vessels must complete
and monitoring devices, including satellite-tracked eliminate the threat that accidental combustion containment and recovery. For example, vessels
a comprehensive “Declaration of Inspection,” which
buoys and transmitters, would continuously track the would pose to nearby vessels. The oil is ignited either may be used as physical barriers or to create a
documents the type and amount of oil product
movements of the oil. Ground-penetrating radar and from the air or from vessels on the water, keeping space where high-volume open water strategies
involved and the rate and pressure at which it will
other remote sensing systems can also track oil that is workers at a safe distance from the combustion. can be employed. The oil is then recovered and
be transferred. Containment booms are deployed
difficult to locate beneath ice and/or snow. Weather the vessels’ high-volume pumps can offload the
and any over-the-side openings are plugged to
conditions are closely monitored by meteorologists, Dispersants oil into a tanker quickly and resume recovery.
prevent a deck spill into the water. A “deck watch”
ice specialists and response personnel who track Another option for spill clean up is the use of
constantly monitors the fueling hose, which has dry-
movements as well as ice, wind, wave and current dispersants. This technique is recognized worldwide International scientists, under management of a
break connections to prevent any residual fuel from
conditions in order to validate the trajectory models. as an environmentally acceptable and highly efficient Norwegian research institute, spent two weeks
escaping during the connection and disconnection.
means of rapidly eliminating spilled oil offshore and in May 2009 in the pack ice in the Norwegian
Vessels and Equipment could play a significant role in the Arctic. Recent Barents Sea to study the behavior of oil spills
Shell’s offshore exploration program deploys world- tests demonstrate that dispersants are efficient in cold in Arctic waters, and to test various response
class response vessels, supported by helicopters and waters and the Arctic’s strong winds and sea conditions options in realistic oil-in-ice conditions.

12 SHELL IN OFFSHORE ALASKA SHELL IN OFFSHORE ALASKA 13

 These offshore tests mark the final stage in the largest then effectively isolated from any direct contact Workforce Development Shell is a corporate member of Alaska Process Industry
and most wide-ranging international research and with marine life or birds. New jobs and contracts for businesses will also spread Careers Consortium (APICC) and has representation
development program ever undertaken to enhance the economic gains substantially. With success, Shell on the Board of Directors. APICC, working with the
the understanding of Arctic oil spills, further improve anticipates our Alaska offshore operations could Put Alaskan Resources to Work (PARW) Initiative,
and develop spill-response technologies, and increase
Offshore Development last as long as 50 years, and a recent independent has developed the Priority Occupations Report,
the ability to react rapidly in the event of an oil spill and Change economic analysis estimates that operations could which shows a significant worker shortage in the
accident. The field tests successfully demonstrated Oil and gas development generate an annual average of 35,000 jobs over future (particularly if the Alaska gas pipeline project
that ice can assist in confining a spill and reduce could bring about that period. That employment is in both jobs proceeds). APICC focuses on K-12 readiness as well
further spreading and weathering of oil by acting as additional changes for directly related to oil and gas operations and as education and training programs to provide a
a natural boom and protective barrier. The field trials Alaska’s North Slope. those generated by the wider economic expansion trained Alaskan workforce. Shell has also sponsored
also validated earlier laboratory testing by confirming Energy production offshore development would bring. (See Chapter the APICC Teacher Industry Externship Program.
that some Arctic conditions (ice presence, for has done much for 8 for more on projected employment growth.) This program allows teachers to work in industry
example) provide a longer “window of opportunity” Alaskans previously, to gain a better understanding of the specific skill
in which different clean-up technologies can be used and today’s prospects Shell has provided increased employment in Alaska requirements of future employees and of industry
effectively, an important input in response planning. could build on that in the past. Upon our return to Alaska in 2005, in general, allowing the teacher to incorporate
history. Due to the Shell quickly began local hiring for career positions this practical experience into course work.
Though arctic conditions can be challenging, cold enormous costs of arctic in our Beaufort Sea exploration program. We had
weather may actually enhance oil spill recovery for offshore development, Class in Barrow, Alaska more than 700 workers trained and on location Other examples of Shell’s sponsorship of workforce
both mechanical clean-up and in situ burning in the projects will have in November 2008 ready to drill in 2007. Over the past several years, development activities through APICC include Career
following ways: to be large-scale, a total of 28 Alaskan interns from the University of Awareness Workshops (CAW) and the Alaska Industry
with few operators able to undertake projects Alaska Process Technology program have worked Skills Coalition’s Youth Employability Skills project.
• Low air and water temperatures generally lead to of this magnitude. Shell plans to work with key on Shell projects. Many of these individuals have This project helps prepare Alaska’s youth for the world
reduced spreading rates and a smaller impacted stakeholders to continue studying the potential since been hired as full-time employees in the of work — helping them gain key “soft skills” that are
area. These beneficial effects greatly reduce the cumulative impacts as the region continues to develop. role of New Operating Professionals. The New needed in industry.
potential for direct oil contact with wildlife Cumulative impacts are environmental or social Operating Professionals are trained on existing
while providing an opportunity for much higher Shell facilities in other states and offshore facilities Buying Locally
effects from multiple activities, each too small to
oil removal rates. in preparation for possible future production Buying from local suppliers is a particularly effective
create a disturbance individually, but together may
operations in the Beaufort and Chukchi seas. way for Shell to spread benefits in the places where
• Oil evaporation rates are reduced in cold create an effect on the environment and/or culture.
we operate. We routinely train local companies to
temperatures so the lighter and more volatile
A skilled and reliable workforce is key to Shell’s help them meet our standards — including safety,
components remain longer and ease ignition. Local Benefits
success in Alaska. A primary objective of workforce environmental and social requirements — so they
• Ice dampens wave action and often limits the area Shell agrees that benefits from offshore development
development is to increase students’ math and science can compete successfully for contracts. In Alaska,
over which winds might otherwise create larger fully should be distributed throughout the region.
education to allow them more career opportunities, we contract with local companies on a full range of
developed waves that could hamper operations. One way Shell is working to achieve this is with
including being able to qualify for Shell positions. jobs and services, from rig staffing, oil spill response
our visible national advocacy to include Alaska in
• Ice serves as a natural barrier to the spread of One example of Shell’s education efforts includes and base operations to mitigation, communications
the offshore revenue sharing program that other
oil and helps concentrate it for recovery with providing key funding to the University of Alaska’s services and marine mammal observers. Shell hopes
states enjoy. Alaska could see billions of dollars in
stationary skimmers dipped into discrete pockets Alaska Native Science and Engineering Program to contract with local companies in the future for
revenue from new offshore development, depending
of oil. The natural containment of oil against ice (ANSEP). Shell’s funding targets the pre-college goods and services. In addition, Shell encourages these
on the government-driven arrangement.
edges also leads to thicker oil films that enhance readiness programs, especially in the North Slope contractors in their workforce development efforts.
Those revenue would include corporate income
the effectiveness of burning. and Northwest Arctic regions. Shell personnel have
taxes paid by the oil and gas producers as well
• During a freeze-up period, most spilled oil traveled to villages to encourage participation in the
as property taxes on new infrastructure and
would rapidly become immobilized and pre-college program and continued education.
facilities built to support energy commerce.
encapsulated within the forming ice. This oil is

14 SHELL IN OFFSHORE ALASKA SHELL IN OFFSHORE ALASKA 15

 Sources
• The Arctic Council • Population Size of the Bering-Chukchi-Beaufort Sea
Stock of Bowhead Whales; George, JC, JE Zeh, R
• The International Energy Agency
Suydam, C Clark, 2002, Paper submitted to the
• The Energy Information Administration Scientific Committee of the International Whaling
• U.S. Minerals Management Service Commission

• The National Academies of Science • Population Size and Rate of increase of Bowhead Whales
from 1978-1988; Zeh , JE, JC George, AE Raftery,
• The Oil and Gas Journal
GM Carrol, 1991

21 SHELL IN OFFSHORE ALASKA

Shell in Alaska To support communities in benefiting
from any potential offshore activities
economically and socially.

To respect the way of life of the

residents of the North Slope.

To find and develop commercial

hydrocarbon resources in the
Chukchi and Beaufort Outer
Continental Shelf.
 6
CHAPTER six:

EXPLORATION AND
THE ENVIRONMENT

www.shell.us/alaska
EXPLORATION AND ENVIRONMENT 1
 Shell scientists collect sea floor
samples in the Beaufort Sea

Exploring Alaska
Alaska’s Arctic is often described as pristine and breathtaking. It is home to indigenous peoples with
complex cultures who have adapted to some of the most extreme conditions on Earth. The region is
also a haven for some remarkable animals. For generations, people have coexisted in balance with
this challenging land and its wildlife. As we move forward with our offshore exploration plans, Shell
is committed to not altering that balance.

We recognize the challenges that lie ahead as we Island and Canada, gives us the competitive edge to Offshore Leasing uses sophisticated research methods, and is issued
explore the vast untapped oil and gas reserves do just that. Our respect for the environment ranges prior to a lease sale. During a lease sale, companies
and the Environment
believed to be in the Beaufort and Chukchi Seas. from taking small steps such as banning Styrofoam bid on desired OCS blocks for the right to explore
Experiences from past arctic developments remind cups onboard any of our vessels to implementing the When the Minerals Management Service (MMS) and develop sub-surface resources in those designated
us of the potential negative effects of exploration. Oil most comprehensive oil spill prevention and response prepares a 5-year plan for leasing offshore submerged areas. Once the individual blocks are awarded to the
spills caused by poor maintenance of a production program for any exploration program in Alaska. acreage (blocks) on the Outer Continental Shelf top bidder, the company prepares a plan of exploration
pipeline at the Prudhoe Bay field in 2006 are a (OCS), the agency prepares an environmental impact (PoE), which details their proposed exploration
recent demonstration of the risks. Today, some are Shell’s plans for operating in Alaska’s Outer statement (EIS) that assesses the impacts of future operations and includes an environmental report,
concerned that noise from seismic surveys, vessels Continental Shelf undergo rigorous environmental activities in the area based on environmental and which is an assessment of the potential impacts
and equipment will cause marine mammals to impact evaluations by regulatory agencies, subject to socio-economic studies. This assessment is extensive, from activities. Pursuant to statutory and regulatory
alter their behavior, divert from their migration some of the highest standards in the world. We also requirements, MMS prepares an Environmental
path and make them more difficult to hunt. conduct our own assessments backed by extensive Jeffery Loman, assistant Assessment (EA) to determine whether a future
research and monitoring. Those studies are done in director for the U.S. Minerals Environmental Impact Statement (EIS) is necessary
Shell knows we will be asked to show Alaskans, consultation with independent scientists relying in part Management Service, under the National Environmental Policy Act (NEPA)
announces bids for the offshore
concerned citizens and government agencies that on local traditional knowledge of the region. As we to assess the potential environmental impacts from
petroleum leases in the Chukchi
we are up to the task of developing responsibly progress with our operations, Shell will work with the proposed exploration activities. If, as a result of the
Sea in Anchorage, Alaska
in the region. Fortunately, our considerable North Slope communities to benefit from their unique on Feb. 6, 2008. The U.S. EA, MMS concludes that the proposed exploration
experience in the Arctic and subarctic regions, and valuable understanding of the land and sea and Minerals Management Service activities would have no significant impact on the
such as the North Sea, Russia’s Sakhalin to gain better insights into the role the environment opened bids across 29 million human, marine, or coastal environment not already
plays in their culture, economy and traditions. acres of the Arctic Ocean for fully considered by MMS, then it will issue a Finding
oil and gas exploration.
of No Significant Impact and approve the PoE. If,

2 EXPLORATION AND ENVIRONMENT EXPLORATION AND ENVIRONMENT 3

 Shell’s experience in the Arctic and arctic-like regions

producing fields by providing important information Marine Mammal Monitoring

about the geologic structures below the sea floor. To further our understanding of how industrial noise
may affect marine life, Shell employs an extensive
In more than three decades of worldwide seismic Marine Mammal Monitoring and Mitigation Program
activities, there is little scientific evidence to (4MP), a vast network of seafloor acoustic recorders
suggest that the sound generated by seismic and sophisticated software that survey migration
surveys has resulted in the stranding, injuries or patterns. Acoustic methods provide a larger number
deaths of marine mammals. Since the beginning of of detections than the more common aerial surveys
significant oil and gas activities in offshore Alaska because they can operate day and night in harsh
in the 1980s, the Bowhead whale population has weather and ice conditions. One goal of the surveys
increased steadily by about 3 percent per year. has been to determine how noise from activities such
as seismic surveys affects whale migration. Preliminary
Shell is working with Native observers to findings suggest that while Bowhead whales do
monitor marine mammal behavior and minimize change their behavior in active seismic areas, they
impacts from noise produced by our operations. are only temporarily deflected off course and return
Shell continues to work to include traditional to their migration course within a few kilometers.
knowledge into our ongoing activities. Scientific studies and technical reviews also indicate
that the potential for harm to various benthic (bottom
Because the presumed hearing range of some marine dwelling) organisms, fish and marine mammals from
mammals may overlap the frequency of seismic exposure to acoustic energy from seismic sources is
exploration, Shell measures the size of an acoustic very low and only occurs when the animals are within
footprint around the operating vessel that could six to eight feet (two meters) from the seismic source.
potentially affect their behavior. Much like humans
exposed to loud noises, marine mammals’ hearing
on the other hand, MMS is unable to make this We will continue to work closely with MMS and
may be temporarily reduced after exposure to certain
Shell’s Environmental Research
conclusion, then an EIS will be required prior to other agencies such as the U.S. Fish and Wildlife In addition to the 4MP, Shell has made a significant
sound levels. To protect the animals from hearing
approving the PoE. This process includes input from Service and the National Marine Fisheries Service. investment in a broad range of baseline studies,
loss, marine mammal observers (MMOs) serve on all
the public. An EIS will produce a Record of Decision We will continue to consult with stakeholders and which will continue throughout our commitment.
Shell vessels, excluding research vessels, working off
(ROD) which identifies the alternative action the the local communities throughout our North Slope Our studies establish a baseline for marine mammal
Alaska. MMOs are stationed on the vessels prior to
agency will support in going forward. operations. In 2008 and 2009, we conducted more population data, ecological biodiversity and
entering the Beaufort and Chukchi Seas. They can
than 60 community engagements on our plans. environmental conditions so that we can further
alert the crew to shut down operations if a marine
Permitting mammal is sighted within a specific distance from the evaluate and mitigate impacts on the region as we
Seismic Surveys, vessel — the “safety zone” — where sound levels are move forward with our operations. These studies,
The NEPA process requires energy companies,
above a protective threshold. In addition, operations many of which are performed in close consultation
whose projects involve major federal actions, for Sound and the Environment
begin with “soft-starts,” where the seismic source is with Inupiat advisors, include tagging programs for
example, federal permits, to contribute to conducting In 2006, Shell began acquiring data from 3-D seismic slowly brought to full power over the course of about seals, walrus and polar bears, coastal stability surveys,
environmental assessments throughout the course surveys in the Chukchi Sea. These surveys, which 30 minutes to prevent startling marine mammals seafloor sediment, air and water quality testing and
of their operations. This is just one of the myriad are the best pre-drilling exploration tools we have and to give them the opportunity to move away. analyses of birds, fish and benthic organisms.
of measures required in oil and gas exploration and today, record energy waves reflected from rock layers
production. In order to operate in Alaska, Shell below the sea floor and can provide an accurate These effective mitigation strategies will be employed
must obtain more than 35 major permits, many view of potential hydrocarbon accumulations. This when seismic and other operations are planned.
Other Wildlife
that must be renewed annually. We welcome the reduces the impact on the environment because fewer Shell will continue to support scientific studies Protection Measures
rigorous oversight and acknowledge that the thorough wells need to be drilled in the search for oil and gas.
regulatory process is an important part of earning of the marine environment and mammals. Shell minimizes flights through the areas of coastal
Seismic data can thus reduce the drilling of “dry,” or caribou migration along the North Slope and keeps
the trust of the communities in which we work. unnecessary, wells and optimize the recovery from

4 EXPLORATION AND ENVIRONMENT EXPLORATION AND ENVIRONMENT 5

 3-D Seismic Survey them above 1,500 feet, when safe, to minimize any We are currently participating in research by the
disturbance. We will also modify our flight routes, if National Fish and Wildlife Foundation’s Polar Bear
needed, and comply with minimum flight levels along Conservation Fund.
coastal areas to help avoid disturbing bird rookeries,
and seal and walrus haul-outs. On our drilling units,
Climate Change
lighting will be adjusted downward and/or shielded
to minimize the potential for bird collisions, and Shell was one of the first major energy producers
strobe lights will be erected to deflect birds from the to acknowledge climate change. We have called
drilling structures. on the industry, the public and governments to do
their part to curb greenhouse gas emissions. Shell
Polar Bears
committed to reducing its own CO2 emissions.
We have already substantially reduced flaring, the
The polar bear is one of
process during the production phase of burning
Alaska’s most recognized
off gas that comes to the surface with extracted oil
mammals, and potential
and is a major contributor to global warming. We
threats to its survival
do not flare during exploration drilling. We have
have garnered significant
made all our operations more energy efficient — we
attention. As with our
produce more efficient products and we are on the
approach to whales,
forefront in the search for alternative energy sources.
Shell meets or exceeds
all current regulations
Alternative Energy Sources
regarding the polar
Shell produces less than 3 percent of the oil and gas
bear, and we will continue to work with agencies
Seafloor consumed daily on a global scale. Global demand for
and stakeholders if new mitigations are required.
energy is rising in both developed and developing
We have already addressed several areas of concern
countries. The hard truth is that dependence on
about the effects of pollution and noise on polar
fossil fuels is not expected to decline in the near
bears, their prey and other wildlife. Contact between
future. Nonetheless, Shell is committed to investing
bears and people is a potential hazard as bears are
Objects are not shown to scale in alternative energy so that we can help reduce
often attracted by human smells and sounds. Shell
the need for conventional energy sources.
employs a number of different mechanisms to
deter bears from our operations including safe food
Marine mammal observation Noise reduction Marine life research
• When and where it’s safe, aerial overflight Seismic activity begins at minimum noise levels and Research on marine life migration routes and timing is
management, the deployment of noise makers (if Exploration Vessels and
surveys are used to verify and confirm that is ramped up gradually so marine life will depart the
needed), and the use of trained polar bear scouts who
Environmental Safety
woven into the operations.
concentrations of marine mammals are not immediate area before the equipment is fully powered
up. Studies have shown fish and marine mammals
actively using critical resources within the area
that may be impacted by Shell operations. return to the area within hours after the noise ceases.
are experienced in managing interactions with bears.
• Rigorous visual monitoring is conducted onboard
For our exploration program, Shell will use a
each vessel by trained marine mammal observers
(MMOs) at all times during periods of activity. A Mineral Management Service EIS has found that drilling unit specially designed to operate safely
MMOs continuously scout for marine mammals
and instruct the captain of a moving vessel to shut planned exploration and production operations on in the Arctic. Several ice management vessels will
down if they observe marine mammals within a
pre-determined safety zone around the vessel. the North Slope will have no significant adverse support these operations for added protection. In
effect on the polar bear. We will continue to monitor addition to stopping operations of a moving vessel
and adjust our operations, if necessary, to avoid if necessary, Marine Mammal Observers (MMOs)
impacting the polar bear population by working will be stationed on each of the drilling-related
closely with regulators, locals, environmental vessels to document marine mammal sightings and
groups and the Polar Bear Commission. behavior during the operating season. Throughout
every activity, preventive measures are implemented
to reduce chances of a spill. In the unlikely event

6 EXPLORATION AND ENVIRONMENT EXPLORATION AND ENVIRONMENT 7

 of a spill, Shell’s operations are backed by a state- limited area. In Shell’s planned exploration operations, areas with pods of whales,
Exploration rigs in arctic conditions
of-the-art fleet of oil spill response vessels ready to about 90 percent of the solids (rocks and clay) are convergence zones and
respond rapidly to any incident large or small. deposited within approximately 500 feet of the drill boundaries of major currents.
rig. The cuttings are mostly clay particles that dissipate We also regularly clean
in less than one mile, so we are simply returning clean ballast tanks and remove
Discharge and the Environment
soil and water to the ocean floor in a very limited area. fouling organisms from the
Oil and gas operations produce different types of This process is similar to the natural cycle of deposits hull, piping and anchors.
discharges that must be properly managed to prevent being washed down a river and into the ocean. Shell and our contractors
or minimize environmental damage. These include: have also agreed to go to
We will continue to work with local stakeholders to additional lengths to address
• R ock cuttings carried to the surface when drilling; agree on the most suitable method of discharge. concerns. All Shell-owned
• Drill mud (the fluid used to carry the cuttings to or operated drilling vessels
the surface, and to cool and lubricate the bit); Drill Mud crossing the Pacific Ocean
• Produced water that comes to the surface with en route to the Arctic will
Shell uses drill mud that is a water-based mixture
the extracted oil during production; conduct at least two ballast
with minimal additives. Government experts and
• Water used to cool the equipment that is exchanges before entering
independent scientists have determined that it has no
discharged into the waters surrounding the the Chukchi and Beaufort
negative impact on the environment, marine mammals
drill rigs; Seas: one in the northern
or local communities. However, even though it is safe,
• Ballast (holding) water used to stabilize and Pacific Ocean and the
we plan to discharge only about 1 percent of what
balance vessels to compensate for the added second in the Bering Sea.
we are allowed under the Environmental Protection
weight of cargo; and By exchanging ballast water
Agency’s (EPA) general arctic National Pollution
• Domestic and sanitary waste from vessels in both locations, organisms present in ballast water Experience in the Arctic
Discharge Elimination System (NPDES) permit.
and platforms. would be the same as those normally delivered via Shell has operated in nine arctic and arctic-like
ocean currents to the Beaufort and Chukchi Seas. regions around the world, where the climate can
Heated Water
How the discharges are managed depends on things pose challenges to recovering spilled oil. In some
Seawater is continually circulated through certain
like climate, sea floor terrain and existing regulations. Domestic and Sanitary Wastewater cases, however, ice and cold temperatures may in
parts of the rig engines in order to maintain the
Shell’s measures are based on more than 30 years fact enhance spill recovery because it helps contain
optimum operating temperatures, similar to the fluid The EPA and Alaska’s Department of Environmental
of research in arctic waters. Those studies include spilled oil, slow its spread and lengthen the window
in a car radiator. The temperature of the cooling Conservation impose strict requirements on
chemical analyses, research on more than 30 marine to apply alternative response methods. Preventing
waters is warmed slightly during this process before managing sewage and sanitary waste from arctic oil
species and measurements of natural sediment, as a spill is, of course, the best way to protect the
it is released into surrounding waters. Tests show that and gas operations. Shell has installed high-efficiency
well as rock cuttings and sea water temperatures. environment, and Shell’s rigorous planning and safety
the cooling water temperature rises about 2 1/2 to sewage treatment systems on our drilling rig.
The data, which continue to be collected, are measures meet or exceed regulatory requirements.
3 degrees Fahrenheit and then quickly drops down
used to assess our potential environmental impact Alaska has some of the world’s most stringent oil
to original levels as it mixes with cold water within
and to formulate strategies to minimize them. Oil Spill Prevention and spill standards, and our operations exceed those
less than 100 meters. The resulting effect to the
Shell meets or voluntarily exceeds all regulatory
surrounding waters is thus minimal and temporary. Response in the Arctic standards. Our oil spill prevention and response
requirements concerning these discharges. (OSPR) plan goes beyond what is mandated not
Although an accidental oil spill from Shell’s
operations in Alaska’s offshore is extremely unlikely, only because of a spill’s potential environmental
Drill Rig Discharge Ballast Exchange
we take the consequences of any potential incident impact, but because our long-term relationship with
As a well is drilled, the rock cuttings are brought to The sea water used for ballast in some vessels can carry Alaska and our standing in the industry demand it.
seriously. That is why we plan for a worst-case
the surface and discharged to accumulate on the sea foreign species to the local ecosystem. To minimize this
scenario — a major oil spill in ice. That is why,
floor. The distribution of the accumulation depends possibility, Shell complies with all mandatory measures
though we are confident we will never need it, we
on water depth and currents, but the thickness of the for ballast water management such as conducting
have developed state-of-the-art equipment and
accumulated discharge from a typical well is just a ballast operations at least 200 miles from the nearest
technology for our Alaska operations to locate, isolate
few centimeters. The debris generally accumulates in a shoreline, and avoiding ballast discharge operations in
and remove oil in a broad range of ice conditions.

8 EXPLORATION AND ENVIRONMENT EXPLORATION AND ENVIRONMENT 9

Reducing Impact to THE ENVIRONMENT
Reducing Impact to THE ENVIRONMENT
 Oil in the Sea are even less likely to occur during production since Prevention Layer III –
By far, most of the oil released into marine waters each additional well drilled reduces the risk associated Mechanical Barriers
with a blowout. Nonetheless, modern drilling Preventing Spills During Drilling and Surface Controls
is from natural hydrocarbon seeps. The National
Academy of Sciences (NAS) estimates that every techniques have brought us a long way from the Under normal drilling conditions, hydrocarbons are In addition to controlling the
year, some 47 million gallons of oil seep naturally blowouts of the past. There have been no significant prevented from flowing out of the reservoir by the well through fluid balance,
from North American sea beds and coastal areas. (>1,000 barrels) OCS well blowouts in more than weight of the drilling mud, which is specially mixed to strong casing provides enough
Of the 29 million gallons of petroleum that enter 30 years or platform spills in more than 28 years. counterbalance the reservoir pressure. This balance can support to resist collapse from
those waters annually from human activities, 85 be lost due to problems such as improper drilling mud sudden pressures. If for any
percent comes from land-based runoff, polluted control or an unexpected over-pressurized gas pocket, reason either of these measures
Shell’s Record
rivers, airplanes and small boats, which are often causing the uncontrolled flow of fluids or gas up the or early detection fails,
At Shell, our goal is zero oil spills, and our record wellbore. Shell applies a multi-layered well control
equipped with inefficient two-stroke engines. Offshore mechanical barriers such as the
and experience give us an edge in meeting that goal system to ensure that the failure of any single system or
oil and gas development is responsible for only 2 blowout preventer (BOP) can
in offshore Alaska. During our operations in the device does not result in a blowout.
percent of petroleum inputs in North America’s seal off the well. A BOP stack
arctic waters off Russia’s Sakhalin Island between
marine environment, according to the 2003 NAS is an assembly of several valves
1999 and 2006, we produced nearly 95 million Layer I – Planning and Preparation
report. In the 40 years of operations in offshore that can be closed one after Blowout preventer
barrels of oil, spilling only 2.12 barrels. Shell’s total Before any drilling begins, data is collected from
Alaskan/Canadian Arctic, none of the 110 wells has another providing back-ups in
spill volume in the Gulf of Mexico (GOM) was seismic surveys, neighboring wells and similar fields
experienced an oil spill from drilling operations. case one device should fail. The BOPs are designed and
just 1.4 barrels in 2006 — that’s from all the spills elsewhere to predict any pressure fluctuations and tested to withstand the maximum expected pressure
large enough to require reporting down to drops of temperatures that might be encountered while drilling and they can be activated even if the rig experiences
oil drifting on the surface. In 2005, the total spill the proposed wells. The well is then appropriately total power failure.
volume from Shell’s GOM production platforms designed to ensure sufficient volume and density can
was 329 barrels, 325 barrels of which were from be maintained in the drill string to counteract any Layer IV – Contingency Planning
a single incident related to Hurricane Katrina. In abnormal pressures in the well. It can take several Historically, mechanical barriers have been rapid and
2009, 1,400 barrels were spilled in the GOM due to months or even years to ensure that the well has been effective, allowing the crew to make the necessary
a pipeline issue. Because of constant monitoring and properly designed, that all potential hazards have been adjustments and resume drilling. However, in the
Courtesy of Judy Patrick Photography

immediate response capabilities, our team was able identified and that an appropriate contingency plan is unlikely event that those fail, emergency measures
to shut down the pipe to avoid a continued release. ready for action. are then performed. These include operations such
Cleanup measures were ramped up immediately.
as killing the well with heavy mud as described
Layer II – Early Detection and Response earlier. A final step would be to drill a “relief well,”
Most significantly, we have worked for nearly a half Once drilling begins, a detection system monitored in an adjacent well that can pump cement or drilling
century in Alaska, safely drilling eleven wells in the real time by our operation centers can catch a problem fluid into the original well to cut off the flow.
Nanuq oil spill response vessel Beaufort and Chukchi Seas between 1982-1991. quickly. Most drilling problems have signs that can
Shell’s experience from all our Arctic operations makes be detected early by sensors, and alarms provide ample
Spills from Oil and Gas Activities us very qualified to work in extreme and unpredictable Preventing Weather-Related Spills
time for responding before the threat becomes an
The offshore spills from oil and gas activities are often weather and ice conditions far from populated Shell’s Critical Operations and Curtailment Plan
emergency. Once a pressure fluctuation is detected,
transportation related. Some of the largest are from centers and support facilities. We cannot afford to (COCP) minimizes spill risks by setting out
the system is adjusted or, if necessary, the pumps are
tanker accidents, but more common are transportation be complacent, however. Shell will continually re- procedures to follow when storm or hazardous ice
shut down immediately. The well may then be shut
spills that occur during fueling, offloading cargo or evaluate and upgrade our prevention and response conditions are expected. These are supported by
down at this point by a heavy column of “kill mud,”
other vessel-to-vessel activities. Pipelines are considered strategies as we move forward in offshore Alaska. highly accurate and continuous weather and ice
which goes into the well bore to suppress the pressure
the safest transportation mode, with spills amounting surveillance and forecasting that use sophisticated
of the well fluids.
to about one gallon per million miles transported. computer modeling, radar and satellite imagery.
Spills during drilling operations can occur from Ice observers are also on board our drillship and ice
blowouts, when the pressure in a well becomes management vessels, and it is their task to report
unbalanced, causing the uncontrolled flow of on the size and behavior of any threatening ice
hydrocarbons to the surface. These are very rare and conditions that could affect drilling operations.

12 EXPLORATION AND ENVIRONMENT EXPLORATION AND ENVIRONMENT 13

 PIPELINE SAFETY

rate and pressure at which it will be transferred.

Communication protocols and the locations of
remote shutdowns and emergency procedures are
also documented. Weather forecasts are carefully
monitored and there is constant radio communication
between the vessels. Containment booms are
deployed and any over-the-side openings are plugged
to prevent a deck spill into the water. The hoses
are tested and a “deck watch” constantly monitors
the fueling hose. Dry-break hose connections
prevent any residual fuel from escaping during
the connection and disconnection, and the fuel
tank capacity of the receiving vessel is checked to
prevent over-filling. After the transfer, the fuel hose
is completely drained, and the fueling connections
and piping are properly isolated and capped.

Response
Preparedness
No other company has ever deployed the immediate
response resources in Alaska offshore that Shell
has. Many operations use on-call spill response
teams that could be hours away from an incident.
Shell’s advanced, ice-capable vessels, equipment
and crews are on an unprecedented 24/7 standby
Objects are not shown to scale
and can begin recovery within one hour of any Weather station on the North Slope
incident, large or small. Shell and its spill response
organizations will stage critical response equipment Oil Tracking
at key locations in the area. Immediate assistance Precise tracking and evaluation of the spill is
These observers provide valuable levels of out pipeline routes and determine how deeply they
is also available from our response organizations, critical to an effective response. In open water,
protection against unpredictable conditions not may need to be buried to maximize environmental
trained Village Response Teams (VRTs) and Shell responders will immediately travel to the
commonly available to most operations. safety. (See chapter 4 for more on pipelines.)
several contractors that maintain qualified teams area to identify, map and report the leading edge
for both offshore and near-shore operations. of any spilled oil. Helicopters will monitor from
Preventing Transportation-Related Spills Preventing Vessel-to-Vessel Spills
Shell’s offshore drilling will begin predominantly the air both visually and with infrared radar, global
Should Shell’s offshore exploration in Alaska lead to Fueling vessels is a routine activity — but one Shell
during open-water conditions. However, because positioning systems and cameras. The spilled oil can
production, the preferred method of transportation takes very seriously. Fuel transfers at sea are only
of the possibility of ice incursions and the natural also be monitored by satellite-tracked buoys and
is by pipelines. The Shell Pipeline Company has performed under conditions when containment booms
variability of freeze-up, we have designed our oil transmitters launched at the beginning of a spill and
been in the pipeline transportation business for more are effective. We employ multiple precautionary
spill response strategies to cover a broad range of at intervals thereafter. In heavy ice conditions, special
than 80 years. We will use the latest technological measures so there is no complacency about the
water and ice conditions, thereby ensuring a safe and ice-strengthened beacons are used to help locate and
advances for safety monitoring, such as “smart operation. Both the transferring and receiving
reliable response throughout the drilling season. map oil trapped in or under ice. Ground-penetrating
pigs” that can travel along the lines checking for vessels must complete a comprehensive “Declaration
radar and other remote sensing systems also aide
problems. Already, Shell has conducted seafloor of Inspection,” which specifies things like the
our ability to track oil beneath ice and/or snow.
surveys looking for potential hazards, so we can map type and amount of oil product involved and the

14 EXPLORATION AND ENVIRONMENT EXPLORATION AND ENVIRONMENT 15

 Weather Monitoring Oil Spill Response Strategies Recovery in Arctic Conditions • D
 uring a freeze-up period, most spilled oil
Effective recovery requires a keen knowledge of how Shell’s OSPR planning provides specific strategies (especially from a subsea blowout) would rapidly
Mechanical Containment and Recovery become immobilized and encapsulated within
oil behaves under a broad range of weather, sea and for operating in conditions from open water to a
ice conditions. Shell’s experienced response personnel Mechanical recovery is a key component of broad range of ice concentrations. It also includes forming ice. Oil would then be effectively isolated
and contractors have a thorough understanding of oil spill response. This measure involves oil ice deflection and management tactics to enhance from any direct contact with marine life or birds.
how ice concentrates, drifts, breaks up and disperses; skimmers, which collect oil at the water’s surface containment and recovery. For example, vessels •  il encapsulated within the ice is isolated
O
how it behaves under a variety of wind, wave and and transfer it to a storage container. Skimmers may be used as physical barriers or to create a from any weathering processes (evaporation,
current conditions; and how it can interact with oil. are most efficient in recovering thick oil. space where high-volume open water strategies dispersion, emulsification). The fresh condition
This detailed knowledge has been acquired through can be employed. The oil is then recovered and of the oil when exposed (e.g., through ice
independent scientific studies in Alaska and abroad, Controlled In Situ Burning the vessels’ high-volume pumps can offload the management or natural melt processes) enhances
controlled releases of oil to open water and ice, and When ice conditions make mechanical recovery oil into a tanker quickly and resume recovery. the probability of effective combustion.
collaborative efforts with research institutes and spill less effective, another option is to burn the oil
response organizations in Alaska, Russia, Norway, off the water or ice. In situ (Latin for “in place”) As mentioned prior, cold weather can enhance
Finland and other arctic nations. Whenever possible, oil spill recovery for both mechanical clean-up A response vessel
burning provides a unique way to eliminate oil
maneuvers a mini-
Shell seeks to engage local community members quickly, efficiently and safely. Oil concentrated and in situ burning in the following ways:
barge through highly
from many of the coastal villages in order to benefit to more than 3 millimeters thick by fireproof
variable concentrations
from their local knowledge and experience. booms, ice or a shoreline can be ignited to burn •  ow air and water temperatures generally
L
of drift ice.
oil off the water surface. On the average, about lead to higher oil viscosity and greater oil
Vessels and Equipment 80-95 percent of oil volume is eliminated as gas, equilibrium thicknesses that result in reduced
Shell’s offshore exploration program deploys world- 1-10 percent as soot and 1-10 percent remains as spreading rates and a smaller impacted area.
class response vessels, backed by helicopters, which a residue. The concentration of smoke and gases These beneficial effects greatly reduce the
were selected for their advanced capability to operate in the air is short lived and carefully monitored to potential for direct oil contact with natural
in the Arctic. Since ice can enter the exploration ensure the plume does not affect the communities resources while providing an opportunity for
area at any time, all of Shell’s vessels, barges and or people in the area. Burning also has significant much higher oil encounter/removal rates using
response equipment have been designed to adapt safety advantages. Surfacing oil often releases large mechanical recovery and burning operations.
to changes in the weather and to a variety of ice quantities of natural gas and igniting those volatile •  vaporation rates are reduced in cold
E Dispersants
conditions. Our high-volume skimming systems vapors will eliminate the threat that accidental temperatures and ice. As a result, the lighter Another option for spill clean-up is the use of
were developed for cold climates and have recovery combustion would pose. The oil or gas is ignited and more volatile components remain dispersants. This technique is recognized worldwide
capacity in excess of the regulatory standards from the air or from vessels on the water, keeping for a longer time, thereby enhancing the as an environmentally acceptable and highly efficient
for worst-case discharge (WCD) scenarios. workers at a safe distance from the combustion. ease with which the oil can be ignited. means of rapidly eliminating spilled oil offshore and
•  e wind and sea conditions in the Beaufort
Th could play a significant role in the Arctic. Recent
Staff Controlled burning is a proven arctic response strategy tests demonstrate that dispersants are effective
Sea are considerably less severe than in most
Shell’s oil spill prevention and response team developed through more than 30 years of experience, in the Arctic’s cold waters, strong winds and sea
open-ocean environments. The presence of
includes personnel with extensive experience in incorporating extensive lab and tank testing, large-scale conditions that make other options challenging.
ice dampens wave action and often limits
Alaska and other arctic regions, and we have more field experiments and actual incidents. By working The mixing energy provided by breaking waves
the area over which winds might otherwise
than 50 local hires who provide vital knowledge in close consultation with the regulatory agencies that hinder other response operations can assist
create larger, fully developed waves.
of the region. Shell’s local response organizations and other stakeholders, and by including a program dispersants in breaking the oil up into small droplets,
to monitor the trajectory of the smoke, burning can •  e ice serves as a natural barrier to the spread
Th
have staff that are highly skilled in the latest arctic which facilitates natural biodegradation by bacteria.
produce minimal environmental impact. It can also of oil and helps concentrate it for recovery
spill prevention and response technology. Shell’s Dispersants do not sink oil to the seafloor, but rather
be fast and highly effective. Experiments have shown with stationary skimmers dipped into discrete
aggressive training program, both in the classroom help droplets to disperse in the water column.
that efficiency is often as high as 95–98 percent. pockets of oil. The natural containment of
and on the water, has built an outstanding team of
oil against ice edges lead to thicker oil films
dedicated responders who share concern and respect Considerable research shows that using dispersants
that enhance the effectiveness of burning.
for this unique and challenging environment. can, under the right conditions, provide a net

16 EXPLORATION AND ENVIRONMENT EXPLORATION AND ENVIRONMENT 17

 Sources
Wildlife Protection
During oil spill response, every effort is made to
minimize environmental damage and prevent
wildlife from coming into contact with oil. Wildlife
management plans may include monitoring, • The International Energy Agency
capture and stabilization and removal. Hazing, • The Energy Information Administration
the process of “herding” animals from an area, • U.S. Minerals Management Service

Courtesy of Judy Patrick Photography

is a commonly used wildlife management tool
used to move wildlife away from the affected • The National Academies of Science
region and always includes close involvement of • The Oil and Gas Journal
regulators. Government agencies will collaborate • Elastec Inc. (http://www.elastec.com/)
with communities and supervise these activities.

Deploying booms during training. Ongoing Research and New Technologies

Oil companies spend millions of dollars every year
to advance oil spill response capability in Arctic
environmental benefit compared to the effects of not and ice-laden waters. Shell will continue to devote
using the dispersant. The trade-off involves accepting substantial resources to its own OSPR research
short-term, localized impact on the near-surface water and development. Some ongoing projects are
in order to significantly reduce the potential long-term investigating new dispersant formulations for cold-
impact to the overall marine environment from a spill water recovery, improving ice deflection techniques
that remains at the water surface, spreads over large and the use of Nuclear Magnetic Resonance Radar
areas, and reaches shore. Dispersants also have the to detect oil under ice. A joint industry project was
potential to treat large areas quickly, providing greater also formed to address stakeholders’ concerns by
protection to birds and marine mammals. Dispersing studying the effect of dispersed oil on Arctic marine
oil in the water rapidly decreases oil concentration organisms specific to the Beaufort and Chukchi
and prevents oil from reaching the shore, where it Seas. This research will provide comprehensive
may require more intrusive clean-up techniques. information that will facilitate Net Environmental
Recent field tests in the Norwegian Arctic have Benefit Analysis comparing the effectiveness of
demonstrated that oil in broken ice can be efficiently dispersants to other response techniques.
dispersed using propellers of the vessel to generate
artificial turbulence to help facilitate the process.

18 EXPLORATION AND ENVIRONMENT

Shell in Alaska To find and develop commercial
hydrocarbon resources in the Chukchi
and Beaufort Outer Continental Shelf.
To support communities WHERE WE
OPERATE IN benefiting from any potential
offshore activities economically
and socially. To respect the way of life of
the residents of ALASKA.
 7
CHAPTER SEVEN:

CO-EXISTING
WITH SUBSISTENCE
CULTURES

www.shell.us/alaska
 Barrow, Alaska

As the most accessible petroleum reserves dwindle, the quest to meet the world’s energy needs
is moving explorers farther into remote regions. These far reaches are often isolated, with
extreme temperatures and rugged terrain, which make exploration ever-more challenging.
Some, like Alaska’s far north, are also home to subsistence cultures that are traditionally,
economically and spiritually linked to the land and sea and the wildlife they support.

For Shell, realizing the energy supply potential of these new frontiers means developing them in
a responsible and sustainable way. Past projects have taught us that the process must begin by
listening to these unique communities and proceeding with caution. Shell’s operations in places like
Russia’s Sakhalin Island and the North Sea have given us both positive experiences and valuable
lessons that will be particularly valuable as we move forward in the Beaufort and Chukchi Seas.

Norway Demonstrating Shell’s leadership

The deep, cold waters of the Norwegian Sea boast in the New Frontiers
one of the world’s most nutrient rich and productive Tapping the energy potential of such regions means
The New Frontiers of the North Sakhalin
Sakhalin Island is surrounded by ice-bound waters ecosystems — and some of the fiercest weather overcoming some huge hurdles, but many things we
Alaska conditions. Fishing has long been an economic and take for granted today were considered beyond reach
six months of the year, when winter cyclones race
The treeless coastal plains along Alaska’s North across a mountainous terrain prone to earthquakes cultural mainstay for Norwegians, whose bounty of not too long ago. For example, we are conducting
Slope are isolated by limited transportation and and avalanches. Wildlife on Sakhalin includes sables, cod, herring, mackerel and other fish make them research and development that will further our ability
communication, and the cold is so extreme that even reindeer, bears, otters, marten, musk deer, wolverines the world’s second largest fish exporter. Whaling to build production oil rigs to withstand the Arctic’s
in summer the temperatures are very low. Off the and rare bird species. It is also the primary summer has a long history in northern Norway, where most extreme ice current forces. And our technology
coast lie the Beaufort and Chukchi Seas, the Arctic’s feeding area for the critically endangered Western Minke whales are traditionally hunted by family- allows us to drill in the Gulf of Mexico’s deep waters
most productive ocean systems, where shallow waters Gray Whale. It has been inhabited by people since the run businesses. The Norwegian continental shelf and unlock remote gas reserves in Malaysia. Shell has
provide rich feeding grounds for walrus, seals, Gray Stone Age, and many of the island’s 3,500 indigenous is also rich in hydrocarbons, making Norway the a recognized and strong track record in understanding
whales and deep-diving sea birds. They are also a people still subsist on fishing, hunting and reindeer third largest oil and gas exporter. Less than one- the challenges and opportunities in these new frontiers
main migration route for Bowhead and Beluga whales herding. The island also has one of the largest oil third of Norway’s estimated petroleum reserves and in deploying the skills and technology necessary
and a habitat for polar bears. Inupiat Eskimos have and gas projects in the world, with one of the most have been extracted, and most of what has been to find innovative solutions for our energy needs.
survived the harsh climate and isolation for thousands complex pipeline systems crossing steep mountains, recovered has been from the North and Norwegian
of years by refining a complex culture that mainly deep valleys and more than 1,000 waterways. Seas. The Barents Sea has seen little exploration but We also know that society’s expectations of how
subsists on the area’s marine and land mammals. potentially contains significant oil and gas reserves. companies conduct their business has changed and
It is estimated that this region also holds vast, that meeting those demands requires new perspectives.
untapped reserves of oil and gas with the potential Now more than ever, it is essential to interact and
to supply a share of the country’s energy needs. communicate with stakeholders to identify and address

2 CO-EXISTING WITH SUBSISTENCE CULTURES CO-EXISTING WITH SUBSISTENCE CULTURES 3

 risks, opportunities and the needs of the people Subsistence and Survival on the And we want to build relationships and opportunities the Nanuuq Commission
who will be impacted by oil and gas development at North Slope – A Key Lesson that will allow community members to share their on polar bears, the Ice
the earliest stages of every project. This begins with Preserving that way of life has a direct impact views and concerns with us as we move forward. Seal Commission, the
gaining the trust and using the knowledge of those on physical survival in the region. Successful Beluga Commission
with long histories in these regions. Responsible subsistence activities often rely on the knowledge and Preserving Traditional Knowledge and the Walrus
stewardship means protecting not only the land understanding embedded in the customs and even the Shell supports those who are working to preserve and Commission
and the sea, but preserving the stores of traditional language of a society. Traditional knowledge along with promote the North Slope culture and language in are active in
knowledge. These measures are not simply the scientific data can provide an early warning system for some important ways. We have partnered with the this endeavor
right thing to do, they make sound business sense. potential environmental problems. In one example, North Slope Borough School District on an Inupiat and meet regularly
They are also complex; we aim to get this right, the Native Alaskan whalers’ understanding of how teacher training program. We are proud of our with our staff. (For
and we are committed to this essential effort as we Bowhead whales use breathing holes led to a much- support for the Alaska Native Science and Engineering more on Shell’s marine
work to meet the world’s growing energy needs. improved method for estimating their populations. Program. Additionally, Shell is gathering traditional mammal programs, see Chapter 6.)
knowledge in cooperation with communities and
Listening and Learning In the 1970s, U.S. government surveys had the tribal governments, and is developing an overarching Protecting the Land
in Alaska’s far North Bowhead’s numbers between 600 and 2,000, program that will cover the North Slope. The traditional knowledge interviews in the villages
We have learned so much already from our prompting the International Whaling Commission provide our oil spill contingency planners with
engagements with the people of the North Slope and to set low hunting quotas. The government based Our goal is to ensure that our studies and operations valuable information on potentially sensitive areas
other communities in Alaska. We also understand its count only on those whales observers spotted include the traditional knowledge of species, ice on and off shore. Shell’s oil spill prevention and
that there is much more to learn and that, above all, migrating in open waters amid broken ice. The and ice movement, weather, migration patterns, response record is excellent, but we are not resting
we need to listen even more as we consider our plans Inupiat whalers knew, however, that these whales can and habitat, land use and subsistence activities. on those laurels. Shell has recently developed one of
for the region. Our encounters have taught us about use their heads to puncture breathing holes in areas Including this valuable resource in our Alaska the most comprehensive programs ever created to
the Inupiat living along Alaska’s covered by solid ice, and those areas needed to be offshore development plans is part of Shell’s achieve our goal of minimal environmental impact
North Slope and how surveyed as well. Using acoustic instruments to track strategy of combining the skills and experience in the Arctic. In the unlikely event of a spill, we will
they have relied for whales in those iced-over areas more than tripled from the company with those from the region. have an unprecedented full-time response capability
generations on the the population estimate. Not only did the Inupiat’s in the North Slope that was designed by pooling the
Bowhead whale knowledge of the whale lead to a more relevant entire industry as well as local subsistence users for
Protecting Marine Mammals
as a source of quota, but to better tracking systems and other the best information available. (For more on Shell’s
Shell hires local subsistence advisors in North Slope
food and fuel. We advances in marine life surveys. Today, the Western Oil Spill Prevention and Response, see Chapter 6.)
communities to record traditional knowledge and
have learned what Arctic stock of Bowheads is estimated at more than
local subsistence concerns. One important function
that means today 10,000 and their numbers are growing at about 3
the advisors serve is to talk with subsistence users to Operational Safety
to the community, percent annually, according to the National Oceanic
ensure that our projects are designed to avoid conflicts Traditional knowledge about sea and ice conditions
whose members and Atmospheric Administration’s 2008 report.
and reduce potential impacts. Our Marine Mammal has been incorporated into many aspects of Shell’s
share in the work, from Monitoring and Mitigation Program (4MP) also operations. A Barrow whaling captain and local vessel
boat building to butchering, and how they receive The knowledge of those who make the Arctic their
employs Inupiat observers, who are aboard our drilling operators helped pinpoint safe harbor locations for
the bounty distributed by the whaling captains. home should be recognized and local stakeholders’
vessels involved in all phases of our operations. The Shell. The information on conditions and depths
And while the Bowhead whale is central, we concerns addressed. That is why Shell has taken
4MP provides Shell, the National Marine Fisheries are documented and carried aboard all Shell vessels
recognize that the other subsistence activities such steps to engage with North Slope communities in all
Service and the U.S. Fish and Wildlife Service with operating in the Beaufort and Chukchi Seas. Shell
as fishing and hunting for caribou, moose and fowl aspects of our programs since we were first awarded
information about marine mammals potentially has relied on local advisors for a project near Point
are also important to the Inupiat way of life. exploration licenses by regulatory agencies in 2005. We
affected by Shell’s programs and includes a “real-time” Thomson, where tests are conducted for on-ice
work with them to study the impact of our operations
system to protect them from possible injury. Groups seismic techniques that gather subsurface data. To
so we can build measures into our exploration plans
such as the Alaska Eskimo Whaling Commission, complete this work safely, a stable and sufficiently
to resolve any potential problems. We want to
thick ice pack is needed. In 2008 Shell decided not
understand matters of importance to the communities
to move forward with the project, in part based on
because ultimately they are important to us, too.

4 CO-EXISTING WITH SUBSISTENCE CULTURES CO-EXISTING WITH SUBSISTENCE CULTURES 5

 the locals’ observations that the ice would be unsafe committed considerable resources to research in comprehensive perspective they offer on the marine The recent walrus-tagging program was done in
for the equipment and the work camps. The locals’ the Beaufort and Chukchi Seas region since our environment and ecosystem. Study areas include: collaboration with Shell and USGS (United States
intimate knowledge of the area has also helped Shell operations began, and we will continue to do so. Geological Survey). It has contributed important
determine the best locations for helicopter landing Our studies augment existing data for marine • Acoustic arrays in both Chukchi and Beaufort information about the effects of climate change on the
pads and buoy placement for monitoring ice flows. mammal, biodiversity and environmental conditions Seas to record marine mammal and seismic noise; population. In 2007, the lack of sea ice in the Chukchi
so that we can evaluate our impact on the region • Tagging programs to track seal and drew concerns about threats to a vital Pacific Walrus
as we move forward with our operations. walrus movements; habitat. The ice provides areas for the walrus to haul up
Applying Traditional • Use of aerial drones to identify and out of the water near their feeding areas. Melting and
Knowledge Built upon existing data, Shell’s research in monitor marine mammals; late-forming ice is of particular concern to hunters,
Alaska offshore and onshore will prove valuable • Aerial survey and radio tagging of polar bears; who report that it can delay and even halt the annual
Advancing Research on the North Slope for generations to come. The dozens of studies, • Coastal stability surveys; harvest. We used overlapping monitoring methods to
The Inupiat observers are key consultants for one carried out with independent scientists, • Seafloor sediment, air and water quality testing; analyze the walrus’ behavior and found indications
of Shell’s most significant investments in Alaska regulatory agencies, academic institutions and • Analyses of birds, fish and bethnic that they may be substituting on-shore beaches for the
offshore planning: our science program. Shell has environmentalists, are especially exciting for the (bottom dwelling) organisms; and ice haul outs while still using their foraging grounds.
• Ice gouge and strudel scour surveys (see
chapter 2) to ensure safe pipeline routes. Shell has and will continue to consult with interested
stakeholders when developing biological studies,
Bowhead whale population growth Important Findings including local residents, environmental, academic and
These studies have already produced some crucial independent organizations, and governmental agencies.
12,000
information about the North Slope’s environment
and marine life. Our Marine Mammal Monitoring Alaska Benefits from Shell’s Experience
Number of whales (or) line-miles of seismic

10,000 System includes a vast network of seafloor acoustic in Responsible Stewardship

recorders and sophisticated software to survey Shell works with subsistence cultures in some of
migration patterns. Acoustic methods provide a the most remote corners of the world. In places
8,000
much larger number of detections than the more like Brazil, Brunei, Canada, Malaysia and Norway,
common aerial surveys because they can operate Shell strives to reduce our impact on traditional
Bowhead populations in
6,000 the Bering, Chukchi, and day and night in harsh weather and ice conditions. activities such as fishing, agriculture and herding,
Beaufort Sea and we work to promote them as well. In Brazil,
One goal of the surveys has been to determine how
Distance traveled by noise from activities such as seismic surveys affects for example, Shell sponsors programs to turn local
seismic ships
4,000 whale migration. Preliminary findings suggest that subsistence fishing into a thriving industry that will
Bowhead population trend sustain the local communities for future generations.
while Bowhead whales do change their behavior in
active seismic areas, they are moderately deflected Shell Brazil also supports the Atlantic Rainforest
2,000
off course and return to their migration course Sustainable Development Initiative, which works
within a few kilometers. Scientific studies and to protect the sensitive environment by helping
0 technical reviews also indicate that the potential local industries develop responsibly. The jobs Shell
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 for impact to various benthic organisms, fish and brings to these communities are often compatible
marine mammals from exposure to acoustic energy with the kind of seasonal work that often employs
from 3D seismic sources is very low and only occurs subsistence users, facilitating their ability to sustain
SOURCES:

George, Jc, Je Zeh, R Suydam, C Clark. 2002. Population Size Of The Bering-chukchi-beaufort Sea Stock Of Bowhead Whales, Balaena Mysticetus, Based On The 2001 Census Off
when the animals are in close proximity to seismic traditional industries. (For more on workforce
Point Barrow, Alaska. Paper Sc/54/brg5. Fifty-fourth Meeting Of The Scientific Committee Of The International Whaling Commission (Iwc). Iwc, Cambridge, United Kingdom.
sounds. Information such as this enables us to alter development and benefits, see Chapter 8.)
Raftery, Ae, Je Zeh. 1994. Bowhead Whale, Balaena Mysticetus, Population Size Estimated From Acoustic And Visual Census Data Collected Near Barrow, Alaska, In Paper Sc/46/
as13 . Forty-sixth Meeting Of The Scientific Committee Of The International Whaling Commission (Iwc). Iwc, Cambridge, United Kingdom. our seismic activities accordingly so they do not
Raftery, Aj, Je Zeh, G Givens. 1995. Revised Estimate Of Bowhead Rate Of Increase. Rep. Iwc 45: 158. disrupt marine life and subsistence user patterns.
Zeh , Je, Jc George, Ae Raftery, Gm Carrol. 1991. Population Size And Rate Of Increase, 1978-1988, Of Bowhead Whales, Balaena Mysticetus, Estimated From Ice-based Census
Data. Marine Mammal Science 7: 105-122.

6 CO-EXISTING WITH SUBSISTENCE CULTURES CO-EXISTING WITH SUBSISTENCE CULTURES 7

 Beluga Whale the company on how to maximize their safety. Among
the largest mammals on earth, the whale was thought
to be extinct in the northwest Pacific until as recently
as 1972. In 2008, Russia’s Natural Resources Ministry
awarded Sakhalin Energy with the Environmental
Project of the Year for its WGW protection program.

Preserving the Indigenous Culture

Sakhalin Energy’s Sakhalin Indigenous Minorities
Development Plan (SIMDP) supports subsistence
activities to preserve the island’s traditional
lifestyles. Some of the program’s funding goes to
health, education and cultural projects as well. In
a recent milestone, the SIMDP helped publish the
first book in the Uilta language, which is spoken
by one of the four indigenous groups and on the
brink of extinction. The SIMDP was listed in the
book: Best Corporate Social Projects 2006-2007.

“Nalukataq (blanket toss)”

Shell’s Commitment to
Sustainable Development developing and hiring the local workforce, using
The Sakhalin Project a plan safe for the salmon. The overall impact of the
Perhaps the best demonstration of Shell’s ability to local suppliers and contractors and supporting
In Russia, the Sakhalin Energy consortium, of pipelines affects less than 1.5 percent of the spawning
co-exist successfully with subsistence cultures is our social and educational projects for the indigenous
which Shell is a partner, has taken several steps to grounds and is expected to be minimal and short
commitment to sustainable development — one of our communities. Our extensive research promotes both
preserve and advance the island’s native lifestyles. term. A multi-million dollar salmon conservation
company’s overarching principles. It requires balancing these goals, and it contributes valuable stores of
The project affects less than 1 percent of the program by Sakhalin Energy and the U.S.-based Wild
short- and long-term interests and integrating social knowledge about the regions where we operate.
indigenous reindeer herders’ pastureland. The Salmon Center was founded in 2008 to promote
company pays for the land use and provides extra conservation and sustainable use of wild salmon and and environmental considerations into every decision
we make. In practice, this starts with learning from our In each of our projects, Shell identifies environmental
help to the herders with equipment. Sakhalin the ecosystems that support them on the island.
neighbors just what those considerations are, and it and social risks at the very outset — long before
Energy also works with indigenous groups and
continues with minimizing our impact while delivering the technical designs or commercial conditions
independent scientists to avoid any potential Western Gray Whales
benefits that will help them preserve their way of life. are cast in stone. Shell’s experience and technical
impact on other traditional economic activities. Sakhalin Energy employs an extensive system to ability to address these risks give us a competitive
research, monitor and protect the Western Gray Whale edge, but we recognize that we must earn the
We minimize our impact by lowering our
Salmon (WGW). An independent panel of whale and marine right to operate in these regions every day.
emissions, reducing disruptions to communities,
Because salmon are so important to the island’s scientists engaged by Sakhalin Energy assesses the
and safeguarding the health and safety of our
economy, Sakhalin Energy found ways of laying nearly impact of energy operations on the whales and advises
employees and neighbors. We deliver benefits by
1,000 miles of oil and gas pipelines without affecting
the salmon’s spawning grounds. Research with U.S.
and Russian scientists and environmentalists produced

8 CO-EXISTING WITH SUBSISTENCE CULTURES CO-EXISTING WITH SUBSISTENCE CULTURES 9

CO-EXISTING WITH SUBSISTENCE CULTURES CO-EXISTING WITH SUBSISTENCE CULTURES
Shell in Alaska To find and develop commercial
hydrocarbon resources in the Chukchi
and Beaufort Outer Continental Shelf.
To support communities where we
operate in benefiting from any potential
offshore activities economically
and socially. To respect the way of
life of the residents of Alaska.

CO-EXISTING WITH SUBSISTENCE CULTURES

 8
C H A P T E R E i g ht:

Offshore
development
benefits

www.shell.us/alaska
 Barrow, Alaska

The Ripples of Offshore

Development Benefits
Energy production has done much for Alaskans previously, and by working with residents today,
Shell hopes to build on that history. Alaska’s waters hold some of the world’s most significant
untapped oil and gas reserves, and when we returned to the state in 2005 for an offshore program,
we did so with clear business objectives. Achieving those goals, however, means succeeding in two
others: conducting our operations in an environmentally responsible manner, and having a positive
presence in the community. Our ability to succeed in Alaska offshore development requires working
in tandem with key stakeholders including local communities for our mutual benefit. Shell is committed
to doing its part.

Alaska’s Gains — we work. They can offer solutions for potential Onshore performance and gains already made by Revenues
environmental problems and add to the stores of the North Slope, however, provide a good estimate
Financial and Beyond How the revenues from oil and gas production are
scientific data. of what might be expected. And we do know that
The development of new offshore oil and gas fields shared among federal, state and local governments
extraordinarily high market prices for oil, such as
could create significant tangible economic benefits for will be a key factor in achieving widespread economic
• Shell’s safety equipment and other resources can $150 per barrel in 2008, are not necessary for
Alaska: Billions of dollars in taxes to state and local benefits for the region. Alaska could see tens of
assist communities struck by natural disasters benefits to be realized. Significant economic gains are
governments, new jobs for local workers, contracts billions of dollars in revenues from new offshore
and human accidents — particularly in the achievable at crude market oil prices of $60 per barrel
for suppliers and more business for local enterprises. development, depending on the arrangement. Those
offshore areas. and market gas prices of $9 per thousand cubic feet.
Shell also brings its social investment projects for revenues would include corporate income taxes paid
health, research and education programs. But a by the oil and gas producers as well as property taxes
host of other, less visible gains often accompany our Calculating Gains
operations as well. Projecting the scope of the benefits is, of course,
difficult during the exploration phase because we do I think one of the very important elements to a project like this — and particularly to
• New jobs, education and business opportunities not yet know the size of the reserves, whether they can
can improve certain social conditions. offshore production moving forward — is achieving state and community revenue
be produced economically, or how revenues would be
shared amongst federal, state and local governments. sharing. Shell will continue to advocate that revenues generated in the federal offshore
• Extensive scientific and socioeconomic research,
a major element of all Shell operations, waters through oil and gas production be shared with Alaskans, as they’re currently
complements local knowledge in the regions where shared in the Gulf Coast states.
Marvin Odum, President of Shell Oil Company and Executive Vice President for the Americas for
Shell Exploration & Production, speaking at a Texas Governors forum, April 2008

2 OFFSHORE DEVELOPMENT BENEFITS OFFSHORE DEVELOPMENT BENEFITS 3

 Assessment of Technically Recoverable Oil and Gas on new infrastructure and facilities built to support
energy commerce. Shell has taken a visible national
local people. We have been able to localize the
majority of the workforce at many operations through
from America’s Outer Continental Shelf, 2006 position in advocating that Alaska be included in
the offshore revenue sharing program that the U.S.
early planning and training, even in places that
initially lacked the technical and commercial skills.
Congress expanded to include the states bordering
the Gulf of Mexico, and will continue to do so.
Workforce Development
Employment directly involved in Shell’s oil and
Employment Growth gas activities in Alaska will include exploration for
An offshore development project can anticipate hydrocarbon deposits, construction of offshore and
operations to extend over a period of 40 to 50 years as onshore production and transportation facilities, spill
oil and gas are discovered, produced and transported prevention and response, logistics, operations and
to markets. An economic analysis conducted in maintenance activities. These new jobs, from initial
2009 by Northern Economics and the University of construction to ongoing production, will require
Alaska finds that oil and gas development in Alaska’s certain skills and knowledge levels. Building the skilled
Outer Continental Shelf (OCS) could generate an workforce for these jobs among North Slope residents
annual average rate of more than 35,000 jobs over the is a priority for Shell, and we began our efforts with
next half century. That employment is in both jobs the Arctic Slope and NANA
directly related to oil and gas operations and those Regional Corporations for
in other areas generated by the economic expansion targeted recruitment
offshore development would bring. The increase is efforts. Shell sponsored
6 percent higher than what projected total statewide job fairs and organized
employment would be without offshore development. outreach activities to
These new jobs potentially represent a total payroll encourage residents
of $72 billion dollars over that period. Oil and gas to apply for local
sector job opportunities would be created throughout hire opportunities.
Alaska in both high-paying, year-round jobs and in
seasonal positions. Of the approximate 6,000 jobs We have trained a number of
directly related to the oil and gas sector, about 3,900 local workers for planned operations, including oil
would be year-round jobs. Part-time and temporary spill prevention and response teams, marine mammal
positions may provide flexibility for those with other observers and communications center operators.
occupations, such as subsistence activities. Many of Through collaborating with local school districts and
the full-time positions would provide work rotations providing training to new employees, Shell offers
that can also accommodate other employment. the tools necessary to bring new workers of all skill
levels into the field. Indirectly, Shell’s funding for
education programs raises education levels among
Hiring Locally students generally, as well as among those interested
Some of these jobs will attract new people to Alaska, in the energy field, ultimately improving their
while many are expected to be filled by current ability to obtain jobs in oil and gas operations.
residents. Hiring local staff is a consistent practice in
all Shell operations. Some countries set requirements
for local hiring, but even when they do not, Shell
makes a conscious effort to build skills and employ

4 OFFSHORE DEVELOPMENT BENEFITS OFFSHORE DEVELOPMENT BENEFITS 5

 Indirect Employment commitment to the areas of education, health, Program through the University of Alaska and
training, environment and local community a Teacher Certification Program. Shell has also
The Northern Economics and University of
development. In 2007, we spent approximately $170 participated in a Teacher Externship initiative in
Alaska economic analysis conducted in 2009 show
million on social investment activities worldwide. which individuals are embedded in oil and gas
that for every new job in the oil and gas sector,
operations to learn more about the industry. The
between three and six more jobs are created in
Categories for contributions include: teacher then returns to the classroom, bringing
other enterprises needed to support the oil and gas
with them materials and knowledge to help
work. Those indirect jobs invariably are stimulated • Education
educate and excite youth on career opportunities
by industry purchases from other businesses, • Arts/Culture
and what skills are needed to acquire positions.
government spending of revenues from oil and • Health
gas and household spending of wages and salaries
• Workforce Development
among oil and gas workers. The broad economic
• Environment Enhancing Local Representation
expansion will maintain the growth in indirect jobs
Shell provided initial startup funds for the
even after oil and gas production begins to decline.
Shell has contributed to several major education North Slope Borough’s Village Voice initiative.
programs in areas ranging from teacher training to This program seeks to provide a platform for
Buying Locally job skills development. A key focus has been on municipal and tribal governments and village
increasing math and science knowledge throughout corporations to represent the communities in public
Buying from local suppliers is a particularly effective
the areas where our exploration activities take place. processes relating to industrial development.
way to help development in the places where we
operate. It directly contributes to the local economy,
Since returning to Alaska, Shell has funded initiatives
creates jobs and builds skills. Shell has contracted
such as the Alaska Native Science & Engineering
with Alaska Native corporations on a full range of Shell scientists collect baseline marine data in the Beaufort sea.
jobs and services, from rig staffing, oil spill response
Our baseline studies seek to further document marine
and base operations to mitigation, communications
mammal, biodiversity and environmental conditions
services and Marine Mammal Observers.
to evaluate our impact on the region. Carried out
in conjunction with independent scientists, these
Research studies further define a baseline for these areas and
will help Shell answer local concerns. It is important
As with all our operations, Shell’s engagement in the
to Shell that the North Slope communities are fully
North Slope is accompanied by extensive research
informed about how industry activities affect marine
on areas ranging from geology, to marine life studies
mammals and other wildlife, how exploration and
and traditional culture and land usage. These
development can be carried out in deep, ice-covered
studies seek to help improve our understanding of
waters and how companies can successfully clean
the impact industrial activities have on the region.
up an oil spill in the unlikely event one occurs.
While these studies are related to our operations,
much of the data collected also adds to the general
public’s store of vital information. Shell’s state- Social Investment
of-the-art equipment, including a multi-million-
One way in which Shell delivers community benefits
dollar Marine Mammal Monitoring System,
is through social investment, voluntary contributions
and the highly trained independent scientists we
to local social and environmental programs. We
collaborate with are among our most important
provide financial support to organizations for
contributions to our Alaskan neighbors.
programs, procedures and activities that enhance
the quality of life for the communities in which
Shell operates. The projects represent Shell’s North Slope students bused to school

6 OFFSHORE DEVELOPMENT BENEFITS OFFSHORE DEVELOPMENT BENEFITS 7

 Safety Shell contributed in
bringing a Water Survival
Shell’s seasonal operations have brought enhanced
and Helicopter
support and security on the North Slope waters
Underwater Escape
and in the wilderness with local vessels and aircraft.
Training (HUET)
These resources and the highly trained crews have
facility to Alaska.
helped to provide search and rescue assistance as
As the only facility
we do with all of our assets. Additionally, Shell
of its kind in the
operated several Communication Centers covering
state, it is a welcomed
the Chukchi and Beaufort Seas to avoid potential
addition to the
conflicts between industry vessels and subsistence
training program industry
hunters. As part of the program, Shell provided
workers currently go through. Training of this
whalers with VHF marine-band radios and satellite
kind is found in only 20 countries worldwide.
phones to immediately notify the Com Center in
case emergency personnel needed to be mobilized.
Community Relief
Communication Center Shell’s resources from operations can also provide
Answers the Call support to communities when disaster strikes. New
Several rescues have been carried out with the use Orleans and Louisiana’s coastal communities faced
of Com Centers. At the request of the whaling massive challenges recovering from hurricanes in 2005
captains, Shell opened the Chukchi Sea centers three and 2006, which were the worst ever to hit the Gulf
months early for the spring whale hunt in 2008. In of Mexico. But the Shell staff’s dedication restored
one incident, 20 Pt. Hope whalers were on an ice pack activities quickly and helped local communities recover
and beginning to harvest a Bowhead whale when the in the aftermath of Rita and Katrina. More than 5,000
pack broke free and began floating out to sea. They staff, retirees and their families contributed more than
Aerial view of Barrow in winter
used the Shell communication equipment to notify the 21,000 hours volunteering in relief efforts. More than
Com Centers, which immediately deployed a Barrow 1,000 employees offered shelter to those left homeless
Search and Rescue team backed by helicopter support. by the disaster. When Shell learned that an ice shortage
The emergency workers arrived in time to rescue all was threatening the regions key fishing industry, we Community Support Services
the crew members from the ice and transport them helped build new ice making capacity on the coast. We Shell has activated a toll-free telephone number, It is part of our effort to communicate and listen
safely back to land. In addition, Shell’s Arctic-based also worked to bring New Orleans back to life with a 866-771-7910, for people to call with to Alaskans and it is available 24 hours a day. A
helicopters flew more than 20 hours in six search and public campaign for its recovery and by becoming a comments, concerns or questions relating to Web site also offers information about Shell’s work
rescue missions in 2008 at the request of the North long-term sponsor of the city’s world renown Jazz Fest. our Alaska activities. Leave a message and Shell in Alaska, including our efforts with communities,
Slope Borough Search and Rescue and the Royal is committed to providing answers to questions commitment to the environment, technology and
Canadian Mounted Police. Minutes, if not seconds, in writing within five business days. other activities. Visit the site at www.shell.us/alaska.
can make the difference between life and death in
arctic waters and Shell’s Com Centers provided a vital
part in rescue operations.

8 OFFSHORE DEVELOPMENT BENEFITS OFFSHORE DEVELOPMENT BENEFITS 9

 chukchi sea

10 OFFSHORE DEVELOPMENT BENEFITS OFFSHORE DEVELOPMENT BENEFITS 11

Shell in Alaska To find and develop commercial
hydrocarbon resources in the Chukchi
and Beaufort Outer Continental Shelf.
To support communities where we
operate in benefiting from any potential
offshore activities economically
and socially. To respect the way of
life of the residents of Alaska.

OFFSHORE DEVELOPMENT BENEFITS

 9
CHAPTER nine:

HOW SHELL WORKS

www.shell.us/alaska
 NORTH SLOPE students BUSED TO SCHOOL

Who We Are
Leading the way in Alaska’s offshore oil and gas development makes good business sense. As the
time of “easy oil” is coming to an end, the world needs to turn to evermore challenging regions to
meet the growing global energy demand. The Arctic is believed to hold a vast share of the world’s
undiscovered oil and natural gas. The Beaufort and Chukchi Seas together hold about 23 billion
barrels of oil and 124 trillion cubic feet of natural gas, according to the U.S. Minerals Management
Service. If developed, these reserves could help to offset supply shortages and provide energy security
for consumers primarily in the U.S. and throughout the world.

Any benefit from these resources requires a responsible approach that respects the interests and
traditional way of life of the residents of Alaska. For Shell, this means earning the trust of Alaskans,
and “doing the right thing” in how we approach local communities in addition to how we plan and
conduct oil and gas operations in Alaska. We believe Shell is one of the best-placed companies in
the world to take on that challenge.

Not only do we have considerable experience in the Arctic and arctic-like regions, but we are
confident our business standards and assurance processes foster our commitment to responsibly
conduct oil and gas development operations in a manner that Alaskans require. Shell has the skills, All Shell companies comply with the following • Health, Safety, Security and the Environment:
business principles: Shell companies manage these matters as critical
technologies and experience to develop these resources in cooperation with local communities. Shell
business activities, set standards and targets for
has been associated with Alaska for many years — we drilled the first offshore oil field in Alaska, • Economic: Long-term profitability is essential improvement, and measure, appraise and report
Middle Ground Shoal in Cook Inlet in 1963, in addition to many of the exploration wells in the to achieving our business goals and to our performance externally.
Beaufort and Chukchi Seas in the 1980s. As we re-enter Alaska now as an industry leader with continued growth. • Local Communities: Shell companies aim to
success in Arctic and Arctic-like regions, we are committed to working cooperatively with Alaskans • Competition: Shell companies support be good neighbors by continuously improving
and hope to stay for a long time. When Shell enters an area to explore and ultimately set up free enterprise. the ways in which we contribute directly and
• Business Integrity: Shell companies insist on indirectly to the general well-being of the
operations, we do so with a clear oil and gas business objective, but we also have two other goals:
honesty, integrity and fairness in all aspects of our communities in which we work.
to minimize any impact to the environment and to create a positive and sustainable presence in the
business and expect the same in our relationships • Communication and Engagement: Shell
communities in which we work. with all those with whom we do business. companies recognize that regular dialogue and
• Political Activities: Shell companies act in a engagement with our stakeholders is essential.
socially responsible manner within the laws • Compliance: We comply with all applicable
General Business Principles to all our business affairs and describe the conduct
of the countries in which we operate. Where
required of all our employees and the companies we laws and regulations of the countries in which
The standards we set for Alaska offshore operations employees wish to engage in activities in the we operate.
contract. The principles are based on our core values
are based on our General Business Principles, which community, they will be given the opportunity
of honesty, integrity and respect for people. They also
were established more than 30 years ago and have to do so where this is appropriate in the light of New technology, changes in global energy
indicate how we promote trust, openness, teamwork
remained consistent because our core values have local circumstances. demand and resources, and challenging frontiers
and professionalism, and pride in what we do.
endured. We have eight basic principles, which apply such as Alaska, however, require constant

2 HOW SHELL WORKS HOW SHELL WORKS 3

 vigilance to ensure our standards, policies Investing in Communities Minimizing Impact on Marine Mammals
and practices stay ahead of the curve.
In 2007, Shell spent approximately $170 Marine mammal observation Noise reduction Marine life research
million on community activities around the • When and where it’s safe, aerial overflight Seismic activity begins at minimum noise Research on marine life migration routes and timing
In joint ventures, we encourage our partners surveys are used to verify and confirm that levels and is ramped up gradually so marine is woven into the operations, to avoid important
world that support projects which address concentrations of marine mammals are not life will depart the immediate area before the biological congregations.
to adopt and apply principles consistent with actively using critical resources within the area equipment is fully powered up. Studies have
issues directly linked to our business. that may be impacted by Shell operations. shown fish and marine mammals return to the
ours. We also expect all the contractors we • Rigorous visual monitoring is conducted onboard
area within hours after the noise ceases.

employ to conform to the principles in all each vessel by trained marine mammal observers
Under our Social Investment program, Shell (MMOs) at all times during periods of activity.
aspects of their work with Shell companies. MMOs continuously scout for marine mammals
Alaska has contributed to selected organizations and instruct the captain of a moving vessel to shut
down if they observe marine mammals within a
pre-determined safety zone around the vessel.
and groups for projects that enhance the quality
Sustainable Development of life in the Alaskan communities in which we
One of Shell’s commitments is sustainable operate. The projects reinforce Shell’s commitment
development. For Shell, contributing to sustainable to the areas of education, health, training, Managing Risks for “real-time” mitigation to prevent possible injury
development means helping meet the world’s growing environment and local community development. When we looked at our projects for lessons about of marine mammals. The 4MP also provides Shell
energy needs in economically and socially responsible managing their environmental and social impacts, one with critical data that are used by Shell and regulatory
ways. That means we must consider the three “P’s”, Local workforce development began at the beginning thing was clear: Projects that considered these risks and agencies to assess the relative impacts of the company’s
People, Planet, and Profit, in everything we do. At of Shell’s re-entry into the North Slope. By May opportunities early, and then addressed them through programs. Shell prepares its 4MP in consultation with
Shell, we believe you cannot have one of these without 2008, Shell had many contracts in place with project design and execution, were more successful. regulatory agencies, marine mammal co-management
the other. Native corporations worth millions of dollars. groups, including the AEWC, and subsistence users.
Project managers identify environmental and social
risks at the very outset — long before the technical Environment and Sustainability
Good Neighbors Trust and Communication design or commercial conditions for the project are For Shell, protecting and respecting the environment
As a global group of companies, we have a We expect we can continue to build the communities’ determined. How well the project has integrated in areas where we work means not only operating
responsibility to be good corporate citizens and trust by reaching out and demonstrating that and effectively addressed these issues in its venture in a responsible manner, but also contributing to
to listen and respond meaningfully to all points environmental stewardship is part of our business plan is then regularly checked. In addition, the most conservation locally and globally. In Alaska, for
of view. Shell also aims to be a good neighbor in model. Earning the trust of our neighbors starts senior sustainable development managers from the example, Shell’s Marine Habitat Fund Program
the communities in which the companies operate. with listening to the different points of view in the business and corporate center now review more than partners with the National Fish and Wildlife
This means not only running our facilities safely community. We routinely engage with a wide range 70 of our largest early-stage projects twice a year. We Foundation (NFWF), which provides grants that
and in an environmentally responsible way, but of stakeholders across the state to listen, understand are strengthening training in this area to help project look at ways to protect the coastal and marine
also working with local people to help them and address their concerns. We continue to hold developers and review teams environment in Alaska. Shell also helped NFWF
benefit from our activities. As we have found in community education and briefing forums as know what to look for and establish the Shell Polar Bear Fund to assist with
our operations worldwide, communicating and well as one-on-one meetings with stakeholders to how to address those issues. population research on the North Slope of Alaska.
working cooperatively with people, supporting their keep them up to date on our progress and plans.
pursuit of what matters most to them and helping These exchanges also allow us to gather historical Shell has also worked with The Nature Conservancy
where we can is the most valuable role Shell can information and traditional knowledge that can be
Cooperation to develop an understanding of conservation
play. In Alaska, we are working with communities incorporated into some of our business operations. Alaska’s local communities priorities in the Alaskan offshore environment. We
by investing in education, workforce development Respect for the people, the sea, the animals and the are key to supporting two of supported the development and completion of the
and environmental protection. We do so not only environment is integral to our business plan, and we our primary goals: protecting first iteration of the Polar Marine Conservation
because of our principles that guide the way we do will continue to work with the people of the region. the environment and creating a Action Plan (CAP) for the Chukchi and Beaufort
business, but because it is important for us to build a positive presence in the community. Since 2006, Seas. The CAP, which was conducted at a regional
relationship with the communities and stakeholders. Shell has worked with the Alaska Eskimo Whaling scale, identifies key conservation targets, assesses the
Commission (AEWC) and whaling captains to ensure health and status of those targets, discusses regional
our operations did not conflict with the subsistence stressors and information needs, and identifies
hunting of the Bowhead whale. Our Marine Mammal regional-scale strategies. In addition, we have worked
Monitoring and Mitigation Program (4MP) provides with marine mammal co-management groups and

4 HOW SHELL WORKS HOW SHELL WORKS 5

 governmental agencies to fund investigations into the
status, abundance, and requirements of several species
including Pacific Walrus, polar bear and ringed seal.

Globally, Shell is committed to sustainable

development to help meet the world’s growing energy
needs in economically, environmentally and socially
responsible ways. In short, Shell is helping to secure
a responsible energy future. This is a commitment to

Courtesy of Ilisagvik College

finding and delivering energy products that help meet
the rapidly growing need for affordable, convenient
and cleaner energy. Shell works to use the company’s
technology, experience and skill to deliver economic
development, energy security and CO2 reduction. Ilisagvik College

We are already producing 3 percent of the world’s

natural gas, the cleanest burning fossil fuel. Shell
Responsibility
also offers advanced transport fuels and lubricants
that help our customers reduce their local emissions True sustainability demands responsible operations.
and improve the fuel efficiency of their vehicles, Shell strives to build our projects, run our facilities
and we deliver better bitumen and chemical and manage our supply chain safely, and in ways
products. Another aspect of our commitment to that reduce any potential negative environmental
sustainability is to invest today for the future. That and social impacts and create positive benefits. How
means leading the way in developing low-CO2 , we make protecting the health and safety of our Butchering a whale harvested off Barrow, Alaska.

second-generation biofuels, building our capacity in employees and neighbors our first priority is reflected
carbon capture and storage technology, and working in our work to employ local people, buy from local
Shell encourages a “stop” culture in which any Many interventions and the people intervening
to drive down the costs of renewable power. contractors and suppliers, manage our emissions —
employee or contractor has the authority to stop are recognized publicly through department
including greenhouse gases — from our activities,
a task that is not being conducted in a safe manner. announcements and other correspondence.
and limit use of resources like energy and water.
Collaborative Partnerships Intensive, frequent training for contractors and
Our efforts to reduce the environmental impact of
Shell has formed global collaborative partnerships employees helps maintain this critical safety culture.
producing oil is demonstrated by our continued On the Roads
with the International Union for Conservation We have a process for reporting all incidents and
search for alternative and unconventional sources.
of Nature, Wetlands International and The “near misses” (events that could have resulted in an In Alaska, road safety training is a high priority.
Nature Conservancy. One of the reasons for these injury or spill), no matter how small. This includes In our operations worldwide, a large share of our
partnerships, besides the opportunity to do real work Safety investigation requirements so Shell can learn from safety incidents have occurred on the road, where
on understanding our environment, is the belief that each situation and avoid similar circumstances we have less control, and safety depends so much
At Shell, safety is a deeply held value, integral
through working with groups such as these, we can in the future. Shell Alaska continually assesses on individual behavior. Every day, vehicles on Shell
to honesty, integrity and respect for people.
address many of the risks and impacts our projects Health, Safety, Security and Environmental (HSSE) business drive millions of miles, so getting road
Our “Goal Zero” philosophy is embraced by
might have at an early stage, and therefore do a issues to understand causal factors and improve safety right is an ongoing priority at Shell. It is
every Shell employee as the relentless pursuit of
better job of avoiding and/or mitigating the risk. performance. In Alaska, as elsewhere in Shell, also of great importance to local communities that
causing no harm to people and no significant
Shell gains valuable insight by talking and listening being out of compliance is never an option. are understandably concerned with the impact of
incidents. In Alaska, our motto is: “Keep it safe,
to these environmental groups at an early stage. industry operations. So, in 2007 we introduced
Keep it Clean and Respect our Neighbors; We
a mandatory companywide road safety standard
Earn our Right to Work Here Every Day.”
covering areas such as route planning, driver training

6 HOW SHELL WORKS HOW SHELL WORKS 7

 TAILORING NEW technologies for Arctic production Minimize environmental impact: and banning use of mobile phones when driving.
The standard draws on successful local projects and
• Today’s directional drilling techniques
allow several reservoirs to be drilled
harmonizes requirements that already are in place
Sound reduction techniques from a single platform. This reduces the in our upstream and downstream businesses. Shell
tested to reduce environmental
impact of operational noise environmental impact and is less costly will continue to implement standards through an
because Arctic platforms are much more integrated road safety program, including consistent
complex than those used in other climates.
efforts to raise safety awareness among employees
Top of platform enclosed • Maximizing the use of space inside and out and contractors; a review of assets like trucks, and
to protect operations and minimizes the platform’s environmental footprint.
workers from harsh weather loading and offloading facilities for safety; and
Maximized use of space • Sound reduction techniques are tested to reduce tools to monitor compliance, such as audits, spot
inside and out minimizes
platform’s footprint the environmental impact of operational noise. checks, inspections and regular safety meetings.
• Drill cuttings and associated waste
from development wells can be
injected into a disposal well. General Standards and
Contractor Requirements
Design and build for the Arctic In all the companies we control, our HSSE standards
• Many years of data gathering go into
include requirements for biodiversity, managing
Optimized logistics for
mobilizing workers and Air cushioned vehicles designing an arctic platform, which greenhouse gas (GHG) emissions, environmental
supplies to and from travel over ice or water
platform minimize traffic to evacuate workers in must resist multi-year ice forces. management, health management, road and process
case of emergency
• Conical units reduce ice loading and safety, and ship quality. We also require our contractors
can spread the impact to a larger to manage health, safety and environmental issues
foundation and protect the structure. in line with our standards. Suppliers and joint
• Multiple barriers within the platform prevent ventures we do not control are encouraged to
hazardous materials (oil, fuel, chemicals) adopt and follow business principles and high-
from escaping to the environment. level HSSE standards equivalent to our own. If our
• Electric pumps, gas lift systems and/or heated expectations cannot be met in a reasonable time, we
well systems that are sometimes required to keep review these relationships. This can involve actions
hydrocarbons flowing properly are undergoing up to and including ending the relationship.
Conical structure heavily
reinforced to resist ice new designs for possible use in Alaska.
pressures and distribute
ice forces to the foundation • The best logistics options are studied for moving
and seafloor
workers, equipment and materials to minimize Processes and Incentives
the number of trips required and maximize
Environmental and social factors play a growing role in
Segregated compartments the payloads. Options include shallow draft
store sea water, ballast, supply vessels and air-cushioned vehicles. our investment decisions and in the way we plan and
fuel, production chemicals,
mud and cement design major new projects. For example, we include the
• New pipeline monitoring systems using
expected future costs of emitting CO2 when making
fiber optics enhance safe transportation.
all major investment decisions. And an environmental,
• New data gathering and computer
Steel and concrete foundation health and social impact assessment is required before
anchors platform to seafloor modeling techniques on ice gouging and
for safety and stability Multiple barriers prevent escape we begin significant work on major projects or existing
other seafloor conditions along potential
of hazardous materials facilities. Any improvements identified must be made
pipeline routes enhance safety.
as part of the project’s design and operation. In 2007,
• Collaboration with pipeline installation contractors
we refined our standard process for developing new oil
and dredging companies ensure that key
Artist rendition of Shell’s new generation of GBS platform (Gravity Based Structure) conceived for Arctic drilling. Upon final development, built structure may differ. technology is ready for arctic development. and gas opportunities to help us identify and address
environmental and social issues earlier and more
consistently. Sustainable development is also part of
how we assess our performance and pay our people.

8 HOW SHELL WORKS HOW SHELL WORKS 9

Shell in Alaska To find and develop commercial
hydrocarbon resources in the Chukchi
and Beaufort Outer Continental Shelf.
To support communities where we
operate in benefiting from any potential
offshore activities economically
and socially. To respect the way of
life of the residents of Alaska.

HOW SHELL WORKS