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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Photo: Jon Klingenberg / US Coast Guard