By Kiley Kroh
As the question of whether to move forward with high-risk Arctic offshore drilling in 2013 looms large, there’s a chance Shell Oil may take that decision out of the Obama administration’s hands. In another costly setback to its long and problem-filled quest to drill for oil off Alaska’s shores, Shell said yesterday that the company will be towing its two Arctic drilling rigs to Asia for major repairs, instead of Seattle as was originally planned.
The announcement comes as the company’s Arctic drilling program is the subject of a high-level review by the Department of the Interior – the biggest question now being whether the vessels could even be ready to resume drilling operations this year.
Despite a year full of technical problems, permit violations, and failures to meet safety standards, company spokesman Curtis Smith said in an email to Forbes:
“The pace of our Alaska operations will always be dictated by safety. The lessons learned from 2012 will be applied to all future exploration programs. Having said that, the drilling program we executed in 2012 was safe and successful. We look forward to building on that progress in the future.”
The Kulluk oil rig sustained damage to its hull and electrical systems during the New Year’s Eve grounding of the vessel, after it encountered a massive storm while being towed from Dutch Harbor.
Smith said Shell’s second rig, the Noble Discoverer, has problems with its propulsion system and could require a full engine replacement. In July, Shell briefly lost control of the Discoverer as it nearly ran aground in Dutch Harbor. And in November, it was damaged by an explosion and fire while in port in the Aleutian Islands. Critics have long been skeptical of whether the aging vessel — built in 1966 and converted from a log carrier — was capable of operating in harsh Arctic conditions.
The grounding of the Kulluk in January was only the latest in a litany of mishaps and struggles with Mother Nature that characterized Shell’s entire 2012 Arctic drilling season. The company’s own troubles were added to a growing number of entities voicing their opposition to Arctic offshore drilling, due to the extreme risk and cost accompanying any operations in the fragile and remote area.
As the Center for American Progress has detailed numerous times, the region lacks even the basic infrastructure — roads, railroads, ports, a permanent Coast Guard facility, adequate facilities to house and feed responders — that would be necessary to mount a large-scale response to an oil spill or other major incident. These obstacles, added to the extreme and volatile conditions in which companies would be operating, led the insurance giant Lloyd’s of London to warn companies that responding to an oil spill in a region “highly sensitive to damage” would present “multiple obstacles, which together constitute a unique and hard-to-manage risk.” And Total SA, the fifth largest oil and gas company in the world, announced it wouldn’t seek to drill in the Arctic because an accident there would be a “disaster.”
These concerns, coupled with Shell’s repeated demonstrations that the oil and gas industry is not prepared to meet the enormous challenge of Arctic offshore drilling, led CAP’s John Podesta and Carol Browner to call on the federal government to take its cautious approach to Arctic Ocean drilling a step further. In a recent Bloomberg op-ed they stated:
“The Obama administration shouldn’t issue any new permits to Shell this year and should suspend all action on other companies’ applications to drill in this remote and unpredictable region.”
If Shell’s rigs cannot be repaired in time to resume exploratory drilling operations this July, it may give the administration the breathing room it needs to consider the myriad risks that were exposed last year. Rushing into Arctic offshore drilling is not an imperative, and the decision to move forward must be based on a clear demonstration that the industry is fully prepared for the realities of Arctic operations. Right now, the American people have no reason to continue taking oil companies at their word when they tell us they can operate safely and responsibly in this far-flung and dangerous region.
Kiley Kroh is the Associate Director for Ocean Communications at the Center for American Progress.