Shell Shocked

Well, maybe not them but I certainly am.  The U.S. Government is finally showing signs of regulating Arctic drilling.  In a blistering report Secretary of the Interior Salazar has forced Shell to resubmit plans for Arctic Ocean oil exploration before they’re allowed to start again, further putting into question the profits to a company that has had to cancel the 2013 season already due to catastrophic equipment failure.

When last I wrote 2 of their 4 main pieces of equipment were on a slow boat to South Korea and one had been crushed like a bug.

In recent developments-

Shell barred from returning to drill for oil in Arctic without overhaul

Suzanne Goldenberg, The Guardian

Thursday 14 March 2013 20.13 EDT

Shell “screwed up” drilling for oil in Arctic waters and will not be allowed back without a comprehensive overhaul of its plans, the Obama administration said on Thursday.

A government review found the oil company was not prepared for the extreme conditions in the Arctic, which resulted in a series of blunders and accidents culminating in the New Year’s Eve grounding of its drill rig.

Shell announced a “pause” in Arctic drilling last month. But Ken Salazar, the interior secretary, told a reporters’ conference call that the company will not be allowed to return without producing a much more detailed plan, one tailored specifically to the harsh Arctic conditions.

“Shell will not be able to move forward into the Arctic to do any kind of exploration unless they have this integrated management plan put in place,” said Salazar, in one of his last acts before standing down as interior secretary. “It’s that plain and simple.”

The findings of the review could mean further costs and delays for Shell, which has spent years and $4.5bn securing permits to drill in Arctic waters.

Salazar on Arctic drilling: ‘Shell screwed up in 2012’

By Kim Murphy, Los Angeles Times

March 14, 2013, 6:15 p.m.

“Shell screwed up in 2012, and we’re not going to let them screw up whenever they [resume] … unless they have these systems in place,” Interior Secretary Ken Salazar said after a new report found that Shell’s contractors were repeatedly ill-prepared to meet the demands of operating in the harsh Arctic environment.

“Before Shell is allowed to move forward, they’re going to have to show to the Department of Interior that they have met the standards that have been required,” Salazar said.

Although Shell has spent nearly $5 billion preparing to drill in the oil and gas-rich Chukchi and Beaufort seas – the most promising oil reserves in the U.S., outside the Gulf of Mexico – the company was unable to fully drill a single well during its initial season.

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Salazar said the company would be required to submit a comprehensive plan describing each phase of its operations, from preparations through demobilization. The department will also require a full, third-party management system audit to ensure the company’s systems are “appropriately tailored for Arctic conditions.”

Report says Shell unprepared for Arctic drilling

AP

Posted on March 14, 2013

Environmental groups were quick to criticize the 30-page report, calling it insufficient despite recognizing Shell’s failings as unacceptable. The groups also knocked the Interior Department for failing to take responsibility for letting a company that was not ready for the challenges it met proceed in the first place.

“By and large, the review told us two things we already knew: Companies are woefully unprepared for the remote and unforgiving Alaskan waters, and our government improperly awarded Shell approvals to operate there,” Susan Murray, Oceana’s Pacific deputy vice president, said in a statement. “The Arctic Ocean is unique and important. Americans deserve better care and stewardship than oil companies or the government have provided.”

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Shell spent $2.1 billion on petroleum leases in the Chukchi Sea in 2008 and estimates that it has spent $5 billion on Arctic drilling. The company contends that it can drill safely. Its two drill ships completed top-hole drilling on two wells last year, but the company was bedeviled by problems.

The company’s spill response plan required that a response barge arrive on site before drill bits dug into petroleum-bearing zones. That never happened. A containment dome, a key piece of equipment, was damaged in testing off the Washington coast.

Seasonal ice in the Chukchi Sea delayed Shell vessels from moving north. When Chukchi drilling began in September, a major ice floe forced Shell’s drill ship off a prospect less than 24 hours later.

When the drilling season ended, the Coast Guard announced that it had found 16 safety violations on the Noble Discoverer, which drilled in the Chukchi, when it docked in Seward, Alaska. The Coast Guard has turned over its investigation of the vessel to the U.S. Department of Justice.

The problems crested in late December when the drill vessel Kulluk, a circular barge with a diameter as long as nearly three basketball courts, broke away from its towing vessel on its way to a shipyard in Washington state.

It ran aground off a remote Alaska Island near Kodiak Island and requires repairs.

Interior Dept. Warns Shell on Arctic Drilling

By JOHN M. BRODER, The New York Times

Published: March 14, 2013

The Interior Department conducted an urgent review of Shell’s operations after a disastrous 2012 drilling season notable for ship groundings, environmental and safety violations, the failure of a spill-containment system, weather delays and other mishaps.

The review, completed last week, concluded that Shell had failed in a wide range of basic operational tasks, like supervision of contractors that performed critical work, including towing one of the company’s two drilling rigs. That rig, the Kulluk, ran aground on Sitkalidak Island in Alaska on New Year’s Eve and is now headed to Asia for extensive repairs. No oil was spilled and there were no serious injuries.

The report was harshly critical of Shell management, which has acknowledged that it was unprepared for the problems it encountered operating in the unforgiving Arctic environment. The report did not single out individual managers.

The 32-page study also faulted government agencies, including the Interior Department and the Coast Guard, for failing to anticipate some of the problems Shell faced, including accidents involving both drilling rigs as they traveled to and from drill sites in the Beaufort and Chukchi Seas.

“Government still has a lot to learn,” said Mr. Salazar, who will soon step down and is expected to be replaced by President Obama’s nominee, Sally Jewell, chief executive of Recreational Equipment Inc. in Seattle. “The Arctic is a very difficult environment to operate in. Shell is one of the most resource-capable companies in the world and it still encountered a whole host of problems trying to operate up there.”

“It doesn’t mean that exploration cannot continue,” Mr. Salazar said. “But I think the cardinal lesson is that moving forward on any Arctic exploration needs the comprehensive integration we attempted to bring to last summer and will attempt to do an even better job of in the future.”