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Alaska: Q&A with Ann Pickard

In 2013, we paused our Alaska exploration programme and due to uncertainty of permits we stopped our preparations for 2014. We have continued our engagement with communities and continue to improve our capabilities for future exploration off the coast of Alaska. Our Executive Vice President Arctic, Ann Pickard, answers questions about Shell’s exploration programme in Alaska.

Ann Pickard, Executive Vice President, Arctic (photo)
Ann Pickard
Executive Vice President, Arctic

Alaska is an expensive and high-risk place to operate. Why does Shell continue to prepare to explore for oil and gas in Alaska?
The nations of the Arctic have taken the decision to open up the region for offshore development and trust companies such as Shell to do it responsibly. The US Federal Government estimates that Alaska has potential offshore oil and gas resources of 60 billion barrels of oil equivalent in roughly equal proportions. We believe that Alaska’s Chukchi and Beaufort seas are the most promising undeveloped hydrocarbon basins in the United States.

Alaska oil and gas represents a potentially enormous and vital energy resource for the world. As traditional oil and gas resources decline, we have to develop resources in new, more challenging locations to help meet rising global demand.

Is it possible to reassure people that Shell can manage the risks of operating in the Arctic offshore Alaska?
Yes, we can. Safety is a top priority across all of our operations. We undertake significant planning and preparation to ensure there is no harm to people or the environment, and this will remain a priority for future operations in Alaska. It is also important that we work to stringent environmental standards and consult with local communities, including Alaska’s indigenous population, at every stage of our operations.

We improve safety by analysing the risks, minimising the possibility of incidents occurring and reducing the potential consequences. Safe well operations demand highly competent people and strict safety procedures as well as rigorous design, construction and maintenance standards for all equipment.

A trained team of people from the community assist in an oil spill response drill in Alaska, USA (photo)
A trained team of people from the
community assist in an oil spill response
drill in Alaska, USA.

It is also the responsibility of industry, the governments and people of the Arctic region, and other key stakeholders to make sure development is carried out in a sustainable and transparent way. Operators should meet the rigorous safety and environmental operating standards needed for responsible development.

What lessons have been learnt during 2013 after the grounding of the drilling unit Kulluk?
We conducted a review within Shell of the events of 2012 to learn from our experiences and improve our plans. The US Department of the Interior (DOI) also recommended that we submit a full operations plan prior to any future exploration programmes. This has led to a strengthening of our organisation around logistics and maritime integrated operations to achieve safe and responsible exploration.

This was reflected in our Integrated Operations Plan (IOP), which formed part of our submission to the DOI in November 2013. Importantly, it included the procedures and competency assurance programmes we are putting in place. Other improvements include enhanced logistics management; improvements to the Arctic containment system; detailed contractor management procedures; focused audit and review plans, and improvements to the overall integration of programmes.

How are Shell’s activities managed to limit negative impacts on the existing communities, culture and infrastructure?
We are very aware of the potential impacts of our operations and have already taken steps to reduce impacts in the communities closest to our leases. This includes providing a camp for our employees in Barrow on Alaska’s North Slope to reduce strain on the limited local housing market or using hotel space during the summer season, when our operations take place. We have our own chartered aircraft to transfer crews from Anchorage to Barrow to reduce pressure on the airlines.

We are committed to working closely with the local communities to understand their needs and preferences. We have community liaison officers (see “Communities”) in each village on the North Slope who engage with local communities to help inform our decisions and notify us of any impacts of our operations. For example, during the operating season, we set up communications centres for the subsistence hunting community. This helps to reduce or eliminate any interference between our operations and their subsistence activities, such as hunting or fishing. We also have a community phone line year-round so that people can inform us of any issues.

Rex Rock, President and CEO of ASRC, Barrow, Alaska, USA (photo)

External opinion

“Arctic Slope Regional Corporation (ASRC) is a family of companies that sets ambitious goals to benefit our region, our shareholders and our businesses, using our Iñupiaq values as a guide. We aim to balance the subsistence and economic needs of our people and value taking part in discussions where critical decisions are being made about potential impacts to our lands and future.

ASRC values its relationship with Shell because the company shows commitment and follow through in supporting our goals. Shell has been working with our communities to understand the importance of our subsistence lifestyle, while working with our companies as world-class contractors. These types of relationships have helped both organisations to grow. We look forward to pursuing partnership opportunities with Shell in the future.”

Rex Rock
President and CEO of ASRC, Barrow, Alaska, USA

What benefits will be provided to local residents in the areas of jobs and training?
We share the benefits of our operations by creating jobs. There are around 140 Alaskan companies that we work with and many of them are local native corporations. These contracts can benefit local residents from shareholder dividends from local co-operatives. We have been working with businesses such as the Arctic Slope Regional Corporation (ASRC) to offer contracts for jobs and skills transfer that can support the local economy.

We also support several education programmes in Alaska, which will help us develop a trained workforce among the local communities. This includes support for the Alaska Native Science and Engineering Program, the Ilisagvik tribal college in Barrow and the Alaska Technical Center in Kotzebue.

What research has Shell conducted on the Alaskan environment to ensure that you operate responsibly?
Since 2005, Shell has invested around $95 million on Alaskan science, including work with other companies in the oil and gas sector. The Alaska Arctic Science programme builds upon traditional knowledge and observations of indigenous peoples, along with input from other stakeholders, to identify research priorities and strategies. A significant portion of the programme involves local people working with experienced scientists.

Our science programmes are some of the most significant contributors to emerging science in the Arctic area of the USA. In an agreement with the National Oceanographic and Atmospheric Administration (NOAA), the data and results of our studies will be available to the NOAA and the broader scientific community.

We have developed innovative technologies and conducted many scientific studies that enable us to work responsibly in this challenging offshore environment. This approach includes the use of unmanned aerial drones and marine acoustic recorders, as well as ecosystem studies that combine traditional and scientific knowledge.

Shell claims to have a strong safety culture. How do you prepare for a worst-case scenario in an area like Alaska, such as an oil spill?
We are committed to lowering the risk of incidents by investing in prevention and operating safely, but we must also prepare for a worst-case scenario. Our oil-spill response plans are very robust and have been approved by US Federal Government Agencies, with input from Alaska state agencies, and are publicly available on our website.

First, Shell has a significant focus on prevention of any well control incident. We have developed an oil-spill prevention toolkit, a strong safety culture and ice management strategies. Second, in the unlikely event of a well control incident, we have a three-tier programme with a dedicated on-site fleet; near-shore barges and response vessels, and onshore response teams staged across the North Slope of Alaska. We are better prepared for any spill than any other company in the world – no other company has ever deployed immediate, onsite response resources similar to ours. We have also prepared subsea capping and containment systems to capture and recover hydrocarbons at the wellhead.

We believe the industry can work together on prevention and response. In 2012, we joined several international oil and gas companies, co-ordinated by the American Petroleum Institute, in a cross-industry project. It aims to create international research programmes to enhance industry knowledge and capabilities for oil-spill response in the Arctic.

What are Shell’s plans for future exploration off Alaska?
A US Ninth Circuit Court decision against the DOI in January 2014 raised obstacles to our plans for drilling offshore Alaska. As a result, we have decided to suspend our exploration programme for Alaska in 2014. We look to relevant agencies and the court to resolve their open legal issues as quickly as possible and will continue to review the situation as we develop our plans.