Big Barriers to Building a New Generation of Arctic Vessels

Abstract

The industry’s experience thus far drilling offshore the Arctic is a powerful argument to build a new generation of vessels and drilling rigs purpose built for operations in heavy ice. Many of the new exploration concepts that seek to overcome challenges in the Arctic were presented at the recent 2014 Arctic Offshore Technology Conference in Houston. Alexander Brovkin, a facilities and logistics adviser at the Chevron Arctic Center, agrees that while new vessel technology is needed for exploration drilling in the Arctic, first the resource must be proved by the drill bit. “An operator must first have a portfolio of Arctic wells before making a significant capital investment to design or build something new,” he said, adding that companies will be pushed to make decisions soon in order to comply with the terms and deadlines set by their offshore leases. Following Shell’s recent experiences, Arctic exploration off North America is at the moment paralyzed. Considered to be two of the most promising Arctic areas, development in the Chukchi and Beaufort Seas offshore Alaska has stalled out despite there being dozens of leases in those areas set to expire over the next couple of years. And after spending billions of dollars on its Arctic drilling program to date, Shell canceled all operations in the area for this year. The decision followed a series of accidents during the company’s Alaskan expeditions that began 2 years ago, one of which involved a drillship running aground, and a United States federal court decision that created uncertainty over the terms of its leases. ConocoPhillips and Statoil followed suit and have indefinitely postponed their Arctic drilling plans off Alaska. However, in the Russian Arctic, ExxonMobil and Rosneft are pressing ahead with a joint venture using conventional semisubmersible technology, which limits their operations to the open water season.