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Shell says it will not drill in Alaska Arctic in 2013

SEATTLE — Plagued with problems with both its drilling rigs and its oil spill containment vessel, Shell Alaska announced Wednesday that it will not conduct offshore drilling operations in the Alaska Arctic this year.

The decision to “pause” Arctic drilling during the upcoming ice-free months of summer will allow the company to repair and retool its troubled rigs and prepare for future operations in a program that has already cost the company nearly $5 billion.

The company will continue to do offshore scientific research and conduct meetings with villagers across the North Slope in an attempt to keep the program moving and ready for resumption “at a later stage,” company spokesman Curtis Smith told the Los Angeles Times.

“We will remain active in other areas as well, and those plans will become more specific over time,” he said.

The decision followed a series of weather problems and mechanical mishaps that prevented the company from drilling anything but “top holes” during the 2012 debut season — never reaching oil deposits. Then on the way south from the Arctic, the conical drilling rig that was the centerpiece of Shell’s operations in the Beaufort Sea, the Kulluk, grounded on a small island near Kodiak in heavy seas after its powerful tow vessel inexplicably lost power.

The Noble Discoverer, which drilled in the Chukchi Sea, was hit by the U.S. Coast Guard for a series of deficiencies in its safety and pollution control systems. The vessel also failed to meet air emissions standards set by the Environmental Protection Agency for operations in the pristine Arctic environment.

Meanwhile, a series of problems with the barge slated to carry a state-of-the-art oil containment system into the Arctic produced so many delays that Shell never obtained authorization this year to begin drilling into hydrocarbon deposits.

Smith said the Kulluk grounding triggered a “re-evaluation” of the Arctic drilling program and a decision was made to suspend operations or the coming season.

“We’ve made progress in Alaska, but this is a long-term program that we are pursuing in a safe and measured way,” Shell Oil Co. President Marvin Odum said in a statement. “Our decision to pause in 2013 will give us time to ensure the readiness of all our equipment and people following the drilling season in 2012.”

Smith said the Kulluk left Kodiak Island on Tuesday on what is expected to be a nine-day journey to Alaska’s Dutch Harbor, where it will be linked with a larger towing vessel for a trip to shipyards in Asia, where it will be repaired.

The Discoverer is also scheduled to set sail for Asia soon.

The U.S. Department of Interior is expected to complete within the next few weeks a full-scale review of Shell’s Arctic operations — triggered by the problems the company faced — to determine how best to resume operations in the frigid, stormy seas off the Alaskan coast.

Conservation groups have been urging the federal government to rethink its approval of offshore operations in the region, and on Wednesday they applauded Shell’s decision to delay.

“It’s about time,” said Margaret Williams of the World Wildlife Fund. “It really is a good time for the public and for the administration to take a step back and look at everything that happened last year, look at how decisions were made and consider that we were extremely, extremely lucky with the Kulluk,” and the fact that it didn’t cause substantial environmental problems when it grounded.

“Really, one has to ask how many close calls do we need before we rethink how drilling is going to be managed in the Arctic?” she said.

Smith said the events of 2012 will help guide future operations. “Our decision is based, among other things, on our desire to incorporate learnings from 2012 operations and to ensure our assets, employees and contractors are best prepared to execute a safe and successful drilling program in the future,” he said.
 

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