Interior Dept. Expedites Review of Arctic Drilling After Accidents

James Brooks/Kodiak Daily Mirror, via Associated Press The Kulluk, a Shell Oil drilling rig, was checked for seaworthiness on Monday off the Alaskan coast after running aground.

WASHINGTON — The Interior Department on Tuesday opened an urgent review of Arctic offshore drilling operations after a series of blunders and accidents involving Shell Oil’s drill ships and support equipment, culminating in the grounding of one of its drilling vesselslast week off the coast of Alaska.

Officials said the new assessment by federal regulators could halt or scale back Shell’s program to open Alaska’s Arctic waters to oil exploration, a $4.5 billion effort that has been plagued by equipment failures, legal delays, mismanagement and bad weather.

Interior Secretary Ken Salazar said that the expedited review, which is to be completed within 60 days, was prompted by accidents and equipment problems aboard Shell’s two Arctic drilling rigs, the Kulluk and the Noble Discoverer, as well as the Arctic Challenger, a vessel designed to respond to a potential well blowout and oil spill.

In addition, the Coast Guard announced Tuesday that it would conduct a comprehensive marine casualty investigation of the grounding of the Kulluk on Dec. 31.

Shell’s repeated and early misadventures have confirmed the fears of Arctic drilling critics, who said that the company and its federal partners had not shown that they had the equipment, skill or experience to cope with the unforgiving environment there.

Tommy Beaudreau, director of the Interior Department’s Bureau of Ocean Energy Management, will lead the review. “As part of our department’s oversight responsibilities,” Mr. Beaudreau said in a statement, “our review will look at Shell’s management and operations in the Beaufort and Chukchi Seas. We will assess Shell’s performance in the Arctic’s challenging environment.”

The assessment will look at Shell’s safety management systems, its oversight of contracted services and its ability to meet federal standards for Arctic oil and gas operations.

Marvin E. Odum, president of Shell Oil, said of the government assessment: “It’s not a concern to me. I welcome this kind of high-level review. It’s important that both we and the Department of Interior take a look at the 2012 season.”

Mr. Odum added: “There are obviously some issues that need to be worked on, particularly the marine transport.” He said that it was too early to say what damage may have occurred to the Kulluk but that he had “great confidence in this program.”

Shell’s rigs drilled two shallow wells last summer, but were halted by government officials before they reached oil-bearing formations. Officials would not allow Shell to drill deeper because the company did not have the required capacity to contain spills after the testing failure of a device designed to cap a runaway well and collect the oil.

In the past several months, the Coast Guard has examined the containment barge and the rebuilt dome, and both passed necessary tests. But the Bureau of Safety and Environmental Enforcement still needs to inspect the equipment before it can be deployed. Those inspections were originally to be done later this month, but have been put off because of the Kulluk accident.

Environmental advocates have been leery of the Arctic drilling program for years and became especially vocal after the Kulluk ran aground.

Greenpeace, which is circulating petitions calling on President Obama to halt the Arctic drilling program, said that the Interior Department’s reassessment was long overdue.

“We’ve repeatedly been told Shell is the best in the business, and so we can only conclude after this series of mishaps that the best in the business is simply not good enough for the Arctic,” said Dan Howells, Greenpeace deputy campaigns director. “We only hope that 60 days is long enough to properly examine the extraordinary number of dangerous incidents that have beset Shell’s accident-prone drilling program and put Alaska’s environment at risk.”

Michael LeVine, senior Pacific counsel for the environmental advocacy group Oceana, said that government regulators were too lax in allowing the program to go forward without adequate assurances that Shell could operate safely and competently.

“We hope this review amounts to more than a paper exercise,” Mr. LeVine said. “The Department of the Interior, after all, is complicit in Shell’s failures because it granted the approvals that allowed Shell to operate.”

The Kulluk was towed to a safe harbor on Monday, where it will undergo extensive inspections before continuing its journey to its winter home in Seattle.

If the Kulluk, which Shell has upgraded in recent years at a cost of nearly $300 million, is found to have been wrecked or substantially damaged, it will be hard for the company to find a replacement and receive the numerous government permits needed to resume drilling in July, as it has planned.

Under Department of Interior rules governing Arctic drilling, the company must have two rigs on site at all times to provide for a backup vessel to drill a relief well in case of a blowout, an uncontrolled escape of oil or gas.

The Kulluk, which does not have a propulsion system of its own, ran into trouble in late December when its tow ship, the Aiviq, lost engine power and the towline separated in high winds and heavy seas.

Shell’s other Arctic drill ship, the Noble Discoverer, has also had problems. In July, before sailing to the Arctic, it nearly ran aground after dragging its anchor in the Aleutian Islands. Then in November it had a small engine fire.

Later that month, during an inspection in the Alaskan port of Seward, the Coast Guard found more than a dozen violations involving safety systems and pollution equipment.

At the end of December, the Noble Corporation, the Swiss company that owns the 512-foot-long drill ship and is leasing it to Shell for $240,000 a day, said that many of the problems had been repaired and that the ship was preparing to sail to Seattle to fix the remainder of them.

Courtesy: The New York Times