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US seeks details from Shell on Arctic drilling

BY ALISON SIDER

WASHINGTON -- United States government says key components of Shell' s program weren' t finalized going into the season, which put pressure on company' s operations and schedule. In the future, the government will require a more comprehensive plan describing every phase of the operation. It will also require Shell' s management systems to be audited by a third party. Shell will need to provide more detailed plans before it can make another attempt to drill off the coast of Alaska, the United States Department of the Interior (DOI) said following a review of the company' s troubled 2012 effort. It also found weak oversight of the contractors Shell relied on led to many of the company' s problems.

Shell has already said it is going to hold off on Arctic drilling this summer to prepare plans and equipment.

"Shell screwed up in 2012 and we' re not going to let them screw up" when they return to the Arctic, Interior Secretary Ken Salazar told reporters during a conference call to discuss the review, which he had ordered in January.

Shell said it will take the extra time to "apply lessons learned" from the review.

"Alaska remains a high potential area over the long term, and we remain committed to drilling there safely, again" Shell spokesman Curtis Smith said.

Shell spent nearly $5 billion on permits, personnel and equipment to prepare for the 2012 drilling season, but the venture was beset by problems before it even began. Drilling was delayed by lingering sea ice. The Noble Discoverer, the drillship used in the Beaufort Sea, almost ran aground. And after equipment designed to contain spills was damaged in a final test, Shell didn' t receive a permit from United States authorities to drill wells all the way to oil bearing depths. Instead, it was only able to drill the initial stages of exploration wells, known as top holes. The department pointed to that and other problems, including the grounding of the Kulluk rig after tow ships lost control of it during a storm, as signs Shell didn' t have strong enough oversight over its contractors.

Marilyn Heiman, Director of the United States Arctic Program (USAP) for The Pew Charitable Trusts, said the review was a good first step but the government needs to do more. "Improved oversight and rigorous world-leading standards must be put in place before any future Arctic drilling is allowed" she said.

The Department' s recommendations were specific to Shell. A spokeswoman for ConocoPhillips, which plans to drill in the Chukchi Sea in 2014, said the company will need to review the report.

Dow Jones Newswires

03/14/2013

 

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