US conditionally approves Arctic offshore oil exploration

The U.S. Bureau of Ocean Energy Management has conditionally approved an oil and gas company's plan to drill four exploration wells into the federal submerged lands of the Beaufort Sea in the U.S. Arctic.

On July 12, 2017, BOEM announced that it had conditionally approved a Beaufort Sea exploration plan (EP) it received from Eni US Operating Co. Inc.  The company is a subsidiary of Italian multinational oil and gas company Eni S.p.A.

Under federal law, BOEM regulates exploration and production activities on the Outer Continental Shelf.  It requires a developer to file and receive approval of an Exploration Plan or EP before most activities can begin.  An EP describes all exploration activities planned by the operator for a specific lease or leases, including the timing of these activities, information concerning drilling processes, the surface location of each planned well, and actions to be taken to meet important safety and environmental standards and to protect access to subsistence resources, but it does not allow actual production of oil -- for that, an operator is required to obtain BOEM approval of a Development and Production Plan (DPP).

Eni US had applied to BOEM for approval of a plan to drill four exploration wells from its existing Spy Island Drillsite, located in Alaska state waters.  The Nikaitchuq North Project's wells would run down from Spy Island, then extend below the ocean floor to federal leases on the Outer Continental Shelf.  Eni proposed exploratory drilling activities commencing in December 2017, and continuing into 2019.

BOEM deemed Eni US's exploration plan application to be submitted in June 2017, triggering a 30-day review period including a site-specific Environmental Assessment of the proposed exploration activities pursuant to the National Environmental Policy Act.  That NEPA process concluded with a Finding of No Significant Impact (FONSI), and on July 12 BOEM issued its conditional approval of the Exploration Plan.  Conditions include a requirement that Eni procure all other appropriate permits from state and federal agencies, as well as certain mitigation measures.

In a statement announcing the conditional approval, BOEM's acting director, Walter Cruickshank, described Eni's exploration plan as "a solid, well-considered plan,” and noted the existence of "vast oil and gas resources under the Beaufort Sea.”