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Interior to Assess Shell’s Alaska Drilling Program
Interior Secretary Ken Salazar said last week he is concerned about a series of incidents involving Royal Dutch Shell plc’s operations offshore Alaska and hopes an investigation will determine how to move forward.
The Noble Corp. Kulluk drilling rig, which Shell used to begin drilling in Alaska’s offshore last year, separated on New Year’s Eve from a tow vessel on its way to port and grounded on an uninhabited Alaska island (see NGI, Jan. 7); the rig has since been moved to harbor at Kiliuda Bay.
Last week the Department of Interior launched an “expedited, high-level assessment” of Shell’s drilling program in Alaska’s Beaufort and Chukchi seas. The inquiry is to be completed within two months to “help inform future permitting processes in the region,” officials said.
Shell had completed its Alaska drilling program for the year in late October. It was the the first time in more than 20 years that a producer had been given permission to drill in the state’s offshore.
“We don’t know what went wrong, and that’s why it’s important that his high-level review occur,” Salazar said in Washington, DC. “There is a troubling sense that I have that so many things went wrong.”
The Obama administration remains committed to Arctic energy development, said Salazar. However, he did not indicate if Shell would be able to resume its exploratory drilling program this summer.
The review of Shell’s program is to focus on three issues regarding its Arctic drilling program last year (see NGI, Sept. 17, 2012; July 30, 2012). The assessment will review problems encountered during certification of the oil spill containment vessel Arctic Challenger; deployment of Arctic Challenger’s containment dome; and operational issues with Noble’s drilling rigs Discoverer and Kulluk.
The assessment plans to review Shell’s safety management systems, oversight of contractors and its ability to meet “strict standards in place for Arctic development,” Interior said. Bureau of Ocean Energy Management Director Tommy Beaudreau, who has been named as the acting assistant secretary for Interior’s Land and Minerals Management, is to lead the assessment. He had led Interior’s reforms on oversight of offshore oil and gas development following BP plc’s Macondo well blowout in April 2010. The U.S. Coast Guard would provide Interior with technical assistance.
“Developing America’s domestic energy sources is essential for reducing our dependence on foreign oil and creating jobs here at home and the administration is fully committed to exploring for potential energy resources in frontier areas such as the Arctic,” Salazar said.
Depending on the review and possible damage to Kulluk, “it may be that Shell isn’t even ready to move forward in 2013,” Salazar said. “We need to make sure that when it does happen, we do it in a way that is safe and protective of the environment.”
On Thursday the Environmental Protection Agency issued two separate notices of violation alleging Shell ran afoul of the Clean Air Act permits governing its drilling unit used in the Beaufort Sea and the drillship and support vessels used in the Chukchi Sea.
Alaska Democratic Sen. Mark Begich said he plans to call for a formal hearing as co-chair of the Senate Commerce Subcommittee on Oceans, Atmosphere, Fisheries and the Coast Guard. In a letter to Coast Guard Admiral Robert J. Papp Jr. and Shell Oil Co. President Marvin Odum, Begich outlined questions he wants answered, such as the adequacy of tow ships in “extreme, but not unexpected” weather; the failure of the towing vessel Aiviq for Kulluk, including its engines, reports of inadequate spare parts and failure of tow systems attached to Kulluk.
The Coast Guard also last week formally requested a marine casualty investigation, considered common practice when a vessel casualty has “regional significance.” An investigative team also has been requested from the Coast Guard Center for Excellence in Louisiana.
Odum said in Houston Wednesday there was a distinction between “maritime transport” and Arctic drilling. “We finished the season safely and that distinction is important. Clearly, there are things to learn. We recognize we are an industry that deals with a lot of risk, but that’s how we become good at what we do.”
Meanwhile, members of Interior’s Ocean Energy Safety Advisory Arctic Subcommittee last week urged federal regulators to adopt baseline standards to govern oil and gas drilling, as well as production, in the Arctic. Bureau of Safety and Environmental Enforcement Director James Watson said the agency may pursue Arctic standards; today there are no specific mandates.
Shell last year voluntarily adopted Arctic drilling safeguards, including spill containment devices that are used for Gulf of Mexico deepwater exploration, Odum said.
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