September 18, 2012 in Business

Shell ends oil attempt for year

Containment dome for Arctic sea site damaged
Sean Cockerham McClatchy-Tribune
 

Problems on the Arctic Challenger at the Port of Bellingham, shown Monday, have forced Shell to give up for the year on drilling in the Arctic waters off Alaska.
(Full-size photo)

WASHINGTON – Shell is giving up for the year on drilling for oil in the offshore Alaskan Arctic after an accident damaged its oil spill-containment dome.

Shell plans to drill shallow “top holes,” but it won’t go deep enough to reach oil-bearing geological formations. It’s a blow to Shell’s $4.5 billion attempt to be the first company in two decades to drill in the offshore Alaskan Arctic.

The oil company said it would do the preliminary work it could this year “in order to lay a strong foundation for operations in 2013.” Shell announced the decision Monday after an accident during testing of the Arctic Challenger, the troubled oil spill-containment barge.

“During a final test, the containment dome aboard the Arctic Challenger barge was damaged. It is clear that some days will be required to repair and fully assess dome readiness,” Shell said in a statement.

The massive containment dome is meant to block releases of oil and natural gas in case of an underwater spill. The company released no details on what happened during the testing in the waters off Washington state.

The Coast Guard, Environmental Protection Agency and the Interior Department said they had no information about what happened to the containment dome.

“The extent and the cause are being investigated now,” Shell spokesman Curtis Smith said.

“We are disappointed that the dome has not yet met our stringent acceptance standards; but, as we have said all along, we will not conduct any operation until we are satisfied that we are fully prepared to do it safely,” Shell said in Monday’s statement.

Environmental groups seized on the accident as a sign that Shell shouldn’t be allowed to drill in the Arctic waters. Cindy Shogan of the Alaska Wilderness League said there was no proven method of cleaning up an oil spill in the harsh conditions of the offshore Alaska Arctic and that the incident showed the company wasn’t ready to try. The Natural Resources Defense Council said the “debacle” was just the latest misstep by Shell.

“If you can’t even test your safety systems in calm waters without damaging them, you’ve got no business drilling for oil in the Arctic,” said Niel Lawrence, senior attorney at the environmental group.

The Interior Department has said Shell won’t be allowed to drill more than about 1,400 feet into the seafloor until its oil spill-containment barge is ready. Oil-bearing zones are thought to be about 5,500 feet down.

Shell already was running out of time for this drilling season before the accident. The company is required to finish any drilling operations before the arrival of sea ice, which could pose a problem for dealing with any spill.

Shell ran into repeated delays with the troubled renovation of its oil spill-containment barge. Shell contractor Superior Energy Services has been retrofitting the 38-year-old Arctic Challenger at a Bellingham shipyard. The renovations were finished last week and the ship began sea trials and inspections, which the company had described as successful up until the containment dome was damaged.

Shell said it planned to drill as many “top holes” as possible this season in hopes of getting approval to drill more deeply next year.

Shell has had problems with even such preliminary drilling. Last week, the company had to halt the effort the day after it began when sea ice started moving toward the drill ship.

Shell said the drill ship, the Noble Discoverer, was expected to resume its position in the Chukchi Sea and start work again in coming days. The company also plans to start “top hole” operations in the Beaufort Sea soon.


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