Shell Under Scrutiny
9:05 am
Wed January 9, 2013

Interior Dept., Coast Guard To Probe Shell’s Arctic Drilling Mishaps

The Obama administration launched a sweeping inquiry into Shell Oil’s Arctic drilling program on Tuesday. The probe, to be completed within 60 days, will look at the company’s mishaps in Alaska and in Puget Sound.

The announcement from Secretary of the Interior Ken Salazar comes a week after Shell’s Kulluk oil rig ran aground in the Gulf of Alaska.

The New Year’s Eve grounding was the latest in a series of mishaps the energy giant suffered in 2012 in its quest for oil in the Arctic Ocean. Shell has invested close to $5 billion in the effort over the past six years.

In a press release announcing the inquiry, Salazar said the Administration is fully committed to exploring for energy in the Arctic. But he also said the challenges posed by the Arctic environment demand a high level of scrutiny.

Environmental groups oppose Arctic drilling and welcomed Salazar’s announcement.

“Shell has proven again and again it is unprepared to operate in Alaskan waters,” said Michael Levine, an attorney with Oceana in Juneau, Alaska. “The federal government is complicit in those failures because it granted the approvals that allowed Shell to begin these operations.”

Most of Shell’s misfortunes with its Arctic drilling program have occurred outside the Arctic:

  • The Kulluk drill rig ran aground off the southern coast of Alaska as it was being towed to Seattle.
  • Completion of the Arctic Challenger, Shell's Arctic spill-containment barge, in Bellingham, Wash., was delayed by months. The delays ultimately forced the company to shelve its plans to drill for Arctic oil until next summer. Without the barge, Shell was able to begin shallow, preparatory drilling but could not obtain federal permission to drill into oil-bearing rocks.
  • Internal emails obtained by KUOW showed that an underwater test of the Arctic Challenger near Anacortes, Wash., was a spectacular failure. An Interior Department official who witnessed the test said it left Shell’s oil-spill containment dome “crushed like a beer can.”
  • Shell lost control of its other Arctic oil rig, the Noble Discoverer, last summer. It nearly ran aground in Unalaska, Alaska, on its way north to the Arctic last summer.
  • Coast Guard inspectors detained the Noble Discoverer on its way back south to Seattle after finding problems in its safety and pollution-prevention systems.

Two other probes into Shell’s Arctic drilling program were also announced on Tuesday:

  • The Coast Guard is conducting a separate inquiry into the grounding of the Kulluk, with assistance from the National Transportation Safety Board and the Bureau of Safety and Environmental Enforcement.
  • US Senator Mark Begich, D-Alaska,  announced he would conduct a hearing on the grounding.

On Monday, Shell successfully floated the Kulluk off rocks near Alaska’s Sitkalidak Island and into a sheltered bay of nearby Kodiak Island. That effort has involved more than 700 industry and government officials.  The joint command leading the effort reported no signs of any oil spills.

Shell plans to use remote-control submarines to inspect the Kulluk's hull for damage. A similar submarine got tangled in anchor lines during the ill-fated field test of the Arctic Challenger in September. It took divers a full day to free the sub.

In an email, Shell spokesman Curtis Smith in Anchorage said Shell welcomes the Interior Department inquiry.

“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.”

Smith said the inquiry will help strengthen the company’s Arctic drilling program.