TIMELINE: Documenting Shell’s 2012 Arctic Drilling Debacle

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"TIMELINE: Documenting Shell’s 2012 Arctic Drilling Debacle"

by Kiley Kroh and Michael Conathan

This week’s grounding of Shell’s enormous Kulluk drilling rig near Kodiak Island, Alaska has not inspired confidence in its preparedness to drill for oil in the Arctic Ocean.

The rig was being towed from Dutch Harbor, Alaska to Seattle when its tow vessel lost control of the massive platform during a harsh winter storm. After numerous attempts to secure the equipment failed, it settled near the shore of uninhabited Sitkalidak Island in the western Gulf of Alaska on Monday night and remains there – with nearly 150,000 gallons of fuel and other fluids on board. The Coast Guard is coordinating a 500-plus person response to assess the damage, but neither they nor Shell has any idea when or how they will regain control of the foundering giant.

Adding insult to injury, on Thursday, the Alaska Dispatch reported that the reason Shell was working so feverishly to move the rig in such harsh conditions was to avoid paying millions of dollars in state taxes it would have owed if the rig was still in Alaska waters on January 1.

Far from an isolated incident, the latest fiasco is just the most recent in a litany of technical failures and struggles with Mother Nature that continue to accentuate Shell’s lack of preparedness to operate in the region. As Christopher Helman writes in Forbes, “It would be a comedy of errors, if the stakes weren’t so high.”

Each of these mishaps, warnings and troubling revelations would individually be reason for pause. Taken together, they offer overwhelming evidence that the oil and gas industry is not prepared for the enormous challenge and incalculable risk of offshore drilling in the remote and volatile Arctic Ocean. Exploiting Arctic offshore reserves is not an imperative and, in fact, is an absurd response to the devastating effects of climate change that are enabling offshore drilling in the first place. Despite investing more than $5 billion into an Arctic venture that includes top-notch crews and state-of-the-art equipment, Shell has stumbled every step of the way.

Here is a look back at some of the major mishaps Shell incurred and warnings they received during 2012:

  • February: An independent report by the Government Accountability Office identified a slew of environmental, logistical, and technical challenges associated with Arctic offshore drilling and concluded Shell’s “dedicated capabilities do not completely mitigate some of the environmental and logistical risks associated with the remoteness and environment of the region.”
  • February: 60 members of congress, nearly 400,000 American citizens and 573 scientists urged the administration to halt Arctic offshore drilling in multiple letters to the White House and the Department of the Interior.
  • April: Insurance giant Lloyd’s of London issued a report on Arctic offshore drilling, warning that responding to an oil spill in a region that is “highly sensitive to damage” would present “multiple obstacles, which together constitute a unique and hard-to-manage risk.”
  • April: German bank WestLB announced it will not provide financing to any offshore oil or gas drilling in the Arctic, saying the “risks and costs are simply too high.”
  • June: Expressing confidence in Shell’s preparedness to operate safely in the region, Interior Secretary Ken Salazar tells reporters “I believe there’s not going to be an oil spill.”
  • July: Shell clarifies an oft-pilloried statement in its spill response plan which suggested they would recover 95 percent of any spilled oil if a spill occurs in the Arctic Ocean. Its new position is that they only plan to “encounter” 95 percent of spilled oil, with no guarantees on how much they could actually collect.
  • July: In an incident that proved to foreshadow future problems, Shell briefly lost control of its Noble Discoverer rig when the vessel slipped its mooring and came close to running aground in Dutch Harbor, Alaska.
  • July: Shell’s oil spill response barge, a key piece of oil spill response equipment, repeatedly fails to obtain Coast Guard certification. In conjunction with late lingering sea ice which blocks access to the drill sites, these delays prevented Shell from beginning drilling work on schedule.
  • August: Norwegian oil and gas company Statoil announces it will suspend its own plans to drill offshore in the Alaskan Arctic Ocean after watching Shell’s struggles in the region. Spokesman Jim Schwartz explained: “The bottom line is, in light of the significant uncertainty regarding Alaska offshore exploration, we’ve decided to take what we believe is a prudent step of observing the outcome of Shell’s efforts before finalizing our own exploration decision time frame.”
  • September: A British parliamentary committee called for a halt to drilling in the Arctic Ocean until necessary steps are taken to protect the region from the potentially catastrophic consequences of an oil spill.
  • September: France based Total SA, the fourth largest publicly traded oil and gas company in the world, became the first major oil producer to admit that offshore drilling in Arctic waters is a risky idea, saying such operations could be a “disaster” and warning other companies against drilling in the region.
  • September: After repeatedly failing to receive Coast Guard approval for its containment barge Shell was forced to postpone exploratory drilling operations until 2013 and settle instead for beginning to drill two non-oil producing preparatory wells.
  • September: Just one day after beginning its long-awaited preparatory drilling operations, Shell suspends drilling as a massive ice pack covering approximately 360 square miles drifts toward the site.
  • November: More than a week after preparatory drilling ended for the season, Shell experienced numerous complications as it tried to get its Kulluk rig out of the Beaufort Sea as winter sea ice encroaches.
  • December: Internal emails between Interior Department officials reveal the September test of Shell’s oil spill containment system was not just a failure but a complete disaster. The containment dome “breached like a whale” and was “crushed like a beer can” – and all in the comparatively temperate waters of Puget Sound.
  • December: Shell’s second drilling rig, Kulluk, slips its cables while being towed out of Alaska waters on an accelerated schedule in order to dodge paying Alaska taxes in 2013. The rig, along with its 150,000 gallons of fuel and drilling fluid, washes up on an uninhabited island along one of Alaska’s most pristine coastlines.

Kiley Kroh is the Associate Director for Ocean Communications and Michael Conathan is the Director of Ocean Policy and the Center for American Progress.

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24 Responses to TIMELINE: Documenting Shell’s 2012 Arctic Drilling Debacle

  1. prokaryotes says:

    Thanks a very cool and informative article on failed Arctic Oil Exploration.

  2. Reemo says:

    sorry to say but i find the article a bit exaggerated in it’s statements. it is a relatively small drill platform and the amount of oil aboard is less than an average coaster would use for fuel. so in total the risk for nature is not so huge as projected. i am no fan of arctic drilling or exploration, however unless WE all stop using so much oil and goods etc… the need for this kind of drilling would disappear if you would forbid big companies to drill in these areas Russia and others will just up their production (and we know how clean they produce) so basically your front garden looks nice but your back garden…..so stop creating demand ! ps the reason why statoil opted out is….there are ridiculously large amounts of oil and gas reserves in front of the Norwegian coast relatively easy to get out..just a matter of world pricing….so when we start paying more at the pump (or higher taxes on fuel) they will start bringing their oil in ….again ! lower the demand !

    • kermit says:

      I imagine it will be harder to convince Russia to avoid drilling in the Arctic if we have not yet stopped. I think the larger countries will have to accept individually the true scale of AGW before they can decide to work together. We in the US have to first stop Arctic drilling, tar sands pipeline from Canada, and selling coal to the Chinese.

      • Mulga Mumblebrain says:

        Perhaps the chances of co-operation from Russia over climate disaster would be greater if the West was not so ferociously intent on destabilising Russia, funding subversives like the hideous ‘Pussy Riot’, publishing 100% anti-Putin agit-prop in its propaganda apparatus, the MSM, and did not have NATO first-strike weapons based on Russia’s borders and a US first-strike policy that lists Russia as one of seven countries that the USA is prepared to launch first-strike nuclear attacks against. Global co-operation over anything much is impossible as long as the West treats the rest of the world as underlings and endlessly interferes in their internal affairs without compunction.

    • Reemo,

      The rig might not carry much oil compared to large vessels, but 150,000 gallons is still a lot of oil. Imagine if the goo were dropped in the streets of your home town — or in your city’s parks.

      However, aside from the magnitude of any potential spill, the loss of control of the rig — which was being moved as a tax dodge! — is just one more sign of how dangerous and difficult offshore drilling is, particularly in tough environments. That’s a big deal.

    • “however unless WE all stop using so much oil and goods etc… the need for this kind of drilling would disappear”

      You could make the opposite argument: If they stop drilling for oil (or governments make them stop), then there will be pressure to find alternatives. As long as we allow oil and gas company to do whatever they want on our land and along our coastline – and subsidize them for it – it will make if more difficult to develop alternatives.
      So why don’t we do the right thing and start imposing moratoriums on drilling. Then the coast of fossil fuels will increase making alternatives relatively more affordable. We HAVE to do it if we want to keep our climate at or below +2 degrees C.

  3. Jacob says:

    What a complete joke the people of this world are for failing to hold the powers that be accountable and allowing governments and corporations to get away with these crimes. Such a good feeling to know that the only places on Earth which will be habitable in the future are already being poisoned. Even if we brought emissions down to zero right now, the planet is still going to end up a far different and inhospitable place when the climate reaches equilibrium.

    • prokaryotes says:

      ” the only places on Earth which will be habitable in the future”

      I think that is far from certain, because for instance of seismic uptake.

  4. prokaryotes says:

    Wow Shell threatens an century old industry!

    Kodiak is the center of fishing activities for the Gulf of Alaska. Its fishery is among the most diverse in the state. Residents participate in at least 27 different fisheries not including the numerous groundfish fisheries, which are lumped together in a single category by the Commercial Fisheries Entry Commission . In addition to being quite diverse, Kodiak’s fishing industry is also one of its oldest, dating back to the early 1800s when the Russians built the first salmon cannery in Karluk. http://www.kodiak.org/business/37-business/176-commercial-fishing-seafood-industry.html

  5. prokaryotes says:

    The island community of Kodiak recognizes that “sustainability” is a survival skill as well as a long-term development plan. The goal was to pair the great fisheries resources of the North Pacific and Bering Sea to renewable energy sources. Many years ago, Kodiak established a goal to increase renewable wind and hydro resources to meet 95% of the community’s electrical needs by 2020 and nine years ahead of schedule, we’re almost there. http://www.kodiak.org/business/renewable.html

    And suddenly Shell …

    • Calamity Jean says:

      “Many years ago, Kodiak established a goal to increase renewable wind and hydro resources to meet 95% of the community’s electrical needs by 2020 and nine years ahead of schedule, we’re almost there.”

      Congratulations! Has anyone looked at what the cost of wind + hydro is compaired to what it would cost for diesel? I’m guessing that the current mix is not only sustainable but also costs less.

  6. prokaryotes says:

    Favorable weather allows salvagers to continue to prep for recovery of grounded drilling rig http://www.washingtonpost.com/business/favorable-weather-allows-salvagers-to-continue-to-prep-for-recovery-of-grounded-drilling-rig/2013/01/04/5a88f770-56e3-11e2-8a12-5dfdfa9ea795_story.html

    Let’s hope this is the beginning of the end for Arctic oil games. And hopefully the ship hull will not take damage and start leaking, because 14 ships will pull the ship over the rocks underwater. What could possibly go wrong?

    • Mulga Mumblebrain says:

      Business psychotics see everything, even disasters they cause, as ‘business opportunities’ The increasingly execrable The Guardian has a story on the GE crop ghouls attempting to use this year’s record deluges in England as an excuse to push GE crops, although none exist that are resistant to water-logging. Evil never sleeps. I see that Mark Lynas, who in my opinion is quite the model of an environmental turncoat, (if he was not a plant from the beginning) has added pushing GE crops to his (no doubt lucrative) business CV.

      • kcbill13 says:

        But Mulga,

        Glenn Greenwald, Naomi Klein, and George Monbiot seem to me to make the Guardian well worth while…

  7. ArkRiot says:

    There has only 20 minutes ago been a 7.7 earthquake in Alaska. ‘Safe’ drilling is not possible.

  8. facts lean left says:

    And all this on our dime, with the billions in subsidies to these murderous pigs.

  9. katym. says:

    somewhat OT… this morning on MediaMattersRadio i heard an interview with (?), who said that she has heard the reason Lisa Jackson is leaving the EPA is because she knows Obama will OK the keystone pipeline and she is against it… uh oh…

  10. James Mason says:

    “Despite investing more than $5 billion into an Arctic venture that includes top-notch crews and state-of-the-art equipment, Shell has stumbled every step of the way.”

    Definitely not top-notch crews. Just a bunch of arrogant Texans with no Alaska experience and no interest in asking local people for advice.

    • DonB says:

      I believe that every poor decision was driven by the (more than) desire to cut costs, whether it was through arrogance, ignorance, or a combination and, as always, enhanced by just greed.

  11. Leif says:

    Cliff Mass has a good review of the weather forecasts leading up to the Kulluk grounding. I have worked the winter waters around Kodiak and weather rules. One learns to distrust good forecasts and trust the bad ones.

    Clearly money was the motivator in the move, not prudence.