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Shell Pauses Arctic Drilling Effort

February 27th 2013

Alaska oil drilling

Royal Dutch Shell said Wednesday that it will not seek to drill in Arctic waters off Alaska’s coast in 2013, an announcement that follows several mishaps last year for the controversial development effort.

“We’ve made progress in Alaska, but this is a long-term program that we are pursuing in a safe and measured way,” said Marvin Odum, who heads the oil giant’s U.S. operations, in a statement. “Our decision to pause in 2013 will give us time to ensure the readiness of all our equipment and people following the drilling season in 2012,” added Odum.

Shell has spent years — and billions of dollars — seeking to drill in the Beaufort and Chukchi seas off Alaska’s northern coast, which are thought to contain massive oil deposits. Shell, in announcing the decision to “pause” the drilling, said it plans to return to the Arctic eventually, noting “Alaska remains an area with high potential for Shell over the long term, and the company is committed to drill there again in the future.”

The company began operations off Alaska’s coast last year but faced several woes, including damage during testing to a key piece of equipment that would be needed to contain a potential subsea blowout.
Ultimately, Shell did not win Interior Department permission to drill into oil-bearing zones, but was allowed to begin preliminary, so-called top-hole drilling last year.
In another problem, Shell’s Kulluk drilling rig ran aground en route back from the Arctic region. The Kulluk and a second rig, the Noble Discoverer, will be towed to Asia for maintenance and repairs, the company said.

The woes prompted a fresh Interior Department review, announced in January, of Shell’s Arctic efforts. “Shell remains committed to building an Arctic exploration program that provides confidence to stakeholders and regulators, and meets the high standards the company applies to its operations around the world,” Odum said.

“We continue to believe that a measured and responsible pace, especially in the exploration phase, fits best in this remote area,” he said. Sen. Lisa Murkowski (R-Alaska), a strong supporter of Shell's move to drill in the Arctic, said the decision proves the company's "commitment to safety."

“This pause — and it is only a pause in a multi-year drilling program that will ultimately provide great benefits both to the state of Alaska and the nation as a whole — is necessary for Shell to repair its ships and make the necessary updates to its exploration plans that will ensure a safe return to exploration soon.”

Environmentalists bitterly oppose drilling in the rough waters off Alaska’s coast, calling it a threat to whales, polar bears and other endangered and sensitive wildlife that inhabit the Arctic seas.
Rep. Edward Markey (Mass.), a liberal Democrat who is running for the Senate, said the Department of Interior should use the delay to conduct an expanded review of the oil industry's plans.

“After bumbling through a year of mishaps, beachings, and complete safety failures, it's clear that Shell and the oil industry was not ready to drill in the Arctic. This postponement is the right decision and should allow the Department of Interior the time it needs to do a full review of the oil industry's capability to handle the harsh conditions in the Arctic,” Markey said in a statement.

Ben Geman writes for The Hill, from where this article is adapted.


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