Shell's Kulluk rig pulls into Alaska's Kiliuda Bay for inspection


Shell's Kulluk rig pulls into Alaska's Kiliuda Bay for inspection


HOUSTON -- Royal Dutch Shell's Kulluk rig is easing into an anchorage in Alaska's Kiliuda Bay--where it will be thoroughly inspected and await its next move, officials said Monday afternoon.

The rig crashed into an uninhabited island off the southern coast of Alaska on New Year's Eve after stormy seas pried it loose from two tug boats that had been pulling it to Seattle for maintenance. It lingered there for more than a week as crews awaited favorable weather conditions.

The Kulluk had been drilling exploratory wells in Arctic waters as part of Shell's $5 billion bid to resuscitate offshore oil production in waters that haven't seen such activity for two decades.

Shell's foray into drilling off the coast of Alaska has been closely watched, and the latest incident has sparked criticism from environmental groups and some politicians, who have argued that the extreme weather offshore Alaska makes equipment problems--and hazardous fuel leaks--more likely to occur and more difficult to rectify.

But the tow operation that began late Sunday night and continued into Monday morning went as planned--the rig was refloated Sunday night at about 10:10 p.m. local time and pulled slowly but steadily by one of the original tugs that lost its connection with the rig late last month. They were accompanied by a small fleet of additional tugs and spill response vessels, along with a Coast Guard cutter. The journey of 45 nautical miles took roughly 12 hours.

It isn't yet clear how long the Kulluk will stay in Kiliuda Bay. Once it is anchored, the rig will undergo thorough inspections to assess how extensively it was damaged and what repairs need to be done. Whether those repairs can be done in the bay isn't yet clear.

"It would be speculation to say what's going to happen next," said Sean Churchfield, the incident commander and operations manager for Shell Alaska, speaking during a press conference Monday afternoon.

The Kulluk was carrying about 150,000 gallons of diesel fuel and lubricant, but Shell has said the rig remained upright and intact, with no signs that it has spilled any fuel. Coast Guard Capt. Paul Mehler III, the federal on-scene coordinator, said the coast guard is conducting flyovers to determine whether there is a visible oil sheen in the area of the grounding.

And crews of a spill response vessel that accompanied the tow reported that its infrared monitoring of water density showed no signs that oil had been discharged.

Some debris, including life boats containing fuel, will have be cleaned up from the area where the Kulluk was grounded, officials said Monday. In a report Sunday, the Alaska Department of Environmental Conservation said local spill responders had been mobilized to the Ocean Bay area and deployed boom, an absorbent material used in spill clean-up, in an effort to protect three streams in the area in the event fuel was released. The fleet accompanying the Kulluk is also carrying 15,000 ft of boom altogether, just in case.

Lysle Brinker, an analyst with IHS Herold, said the safe tow of the Kulluk could mean that Shell has dodged a bullet. Though Mr. Brinker said he expects the already high level of scrutiny of Shell's Arctic plans to be ratcheted up, he said he doesn't expect the company to walk away from the billions of dollars it has already put into its efforts there.

"If they can float it, that tells me the damage isn't that bad," Mr. Brinker said. "To look at it from another angle, if this rig could withstand a beaching and grounding [without spilling], it shows how good the rig is in terms of its ability to withstand harsh conditions."

Shell's Arctic drilling program has been beset with mishaps from the start. The company paid $2 billion for leases to drill in the region, but has managed to start only two exploratory wells.

Lingering ice prevented the company from dispatching its two rigs to the region for months. Once in Alaska, one rig used by Shell--Noble Corp.'s Discoverer--nearly ran aground in July after becoming unmoored while in port. Equipment failures on the rigs have also been a problem.

ConocoPhillips and other oil explorers are carefully following Shell's experience as they consider whether or not to test the frigid waters north of Alaska to extract the estimated 550 million barrels of oil estimated in the area.

The Natural Resources Defense Council and other environmental groups as well as numerous U.S. lawmakers are citing the Kulluk accident in efforts to pressure the White House to suspend Arctic drilling permits.

Susan Murray, vice president for the Pacific of Oceana, an advocacy group that works to protect oceans, said in a statement Monday that companies cannot drill safely in the Arctic and should not be allowed to try.

"We were lucky to avoid a major catastrophe. We were lucky the accident happened close to Coast Guard facilities. We were lucky the weather allowed for salvage. We were lucky an accident like this did not happen while the Kulluk was drilling. However, Alaskan waters demand more than luck," she said, adding that Kiliuda Bay is an important site for fisheries.

Duane Dvorak, the local on-scene coordinator, said Monday that environmental concerns were considered in selecting Kiliuda Bay as a place of refuge, and said "every effort" was made to keep fishing boat captains and fishing operations in the loop on the route of the tow in order to minimize disruption.

Dow Jones Newswires


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