Shell’s mishaps in Arctic drilling prompt U.S. review1/9/2013
Royal Dutch Shell Plc’s quest for oil off Alaska’s Arctic coast will be subjected to fresh scrutiny by the U.S. Interior Department after several mishaps last year, including losing control of two drilling rigs.
Interior Secretary Ken Salazar said the 60-day assessment of drilling in Alaska’s Beaufort and Chukchi seas will be used in considering future permits for Arctic exploration. Environmental advocates said the review should lead to tighter government rules, or even force Shell to suspend its efforts.
“The administration is fully committed to exploring for potential energy resources in frontier areas such as the Arctic,” Salazar said yesterday in a statement. “The unique challenges posed by the Arctic environment demand an even higher level of scrutiny.”
Shell has spent about $4.5 billion in the past seven years seeking to drill in the Alaskan waters. On Dec. 31, the drill ship Kulluk broke free of a tow boat in a storm and was stranded on an uninhabited island until it was towed to a nearby harbor this week for examination.
Before that, a containment dome designed to cap oil spills had difficulty getting certified and was damaged during tests in September. The drill ship Noble Discoverer slipped its mooring in July and drifted toward shore in the Aleutian Islands.
“It’s clear that something has gone very wrong at almost every stage of Shell’s drilling plan,” Ben Ayliffe, head of the Arctic campaign for the environmental group Greenpeace, said in an interview. “It’s going to be very, very difficult for the Department of Interior not to force them into some serious changes.”
Shell’s plans and setbacks should be viewed in the context of 10 or 15 years, the time required to achieve commercial production in the Arctic, said Tad Patzek, a former Shell researcher who chairs the Petroleum and Geosystems Engineering Department at the University of Texas at Austin.
“It’s a fairly small scale and fairly low-risk operation which will stumble as it has, because the development of major new technology always stumbles in the beginning,” he said yesterday in a telephone interview.
Alaska Democratic Senator Mark Begich, an advocate for energy development in Alaska, said he will hold an oversight hearing to examine why the Kulluk broke free of a tow line during a winter storm and grounded on an uninhabited island, and probe the Coast Guard’s response. Representative Ed Markey, a Massachusetts Democrat, has asked Shell to respond to a series of questions about the Kulluk by today.
“We have seen enough accidents to know that right now Shell is not prepared to safely drill in the Arctic,” Markey said in a statement yesterday.
Shell said the effort would help it redouble its efforts.
A “high-level review will help strengthen our Alaska exploration program going forward,” Kelly op de Weegh, a spokeswoman for The Hague-based company, said yesterday in an e- mail.
“While we completed our drilling operations off the North Slope safely and in accordance with robust permitting and regulatory standards, we nevertheless experienced challenges in supporting the program — especially in moving our rigs to and from the theater of operations,” op de Weegh said.
Tommy Beaudreau, director of Interior’s Bureau of Ocean Energy Management, will lead the review, the department said.
The agency will examine Shell’s safety management systems, its oversight of contracted services, and its ability to meet the strict standards in place for Arctic development.
The review, which isn’t likely to reopen the question of whether to drill in the Arctic, will only examine the logistical challenges Shell faced repositioning equipment, said Amy Myers Jaffe, executive director of energy and sustainability at the University of California-Davis.
“It’s definitely turning out to be harder to do than was expected,” she said. That’s in part because of “the intense scrutiny that comes from trying to do something in such a sensitive ecological area.”