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Center for Biological Diversity:
Arctic Oil Development
The New York Times, September 17, 2012

Shell Delays Arctic Oil Drilling Until 2013

By Clifford Krauss

HOUSTON — With the prospect of rich new oil fields in tantalizing reach, Shell Oil announced on Monday that it was forced to put off completing wells in the Alaskan Arctic for another year after a spill containment dome was damaged during a testing accident.

While the company will perform preliminary work this year on several wells in the region, it will not be able to drill for oil until next summer at the earliest.

The latest setback in Shell’s six-year, $4.5 billion effort to drill off the coast of Alaska heartened environmentalists, who have opposed the drilling program at every turn.

Some suggested that Shell’s inability to control its containment equipment in calm waters under predictable test conditions suggested that the company would not be able to effectively stop a sudden leak in treacherous Arctic waters, when powerful ice floes and gusty winds would complicate any spill response.

But the company received a shot of encouragement from the Obama administration, which defended Shell’s efforts and expressed the desire to continue working with the company to open the Arctic for drilling next year.

Shell expected to receive all the necessary permits to drill up to five wells this summer and fall, but equipment problems and persistent sea ice forced the company to cut back its program repeatedly.

“It’s a disappointment that this particular system is not ready yet,” said Marvin E. Odum, the president of Shell Oil, in an interview. “We’ve made the call that we are better off not drilling in hydrocarbons this year.”

It was the third year in a row that Royal Dutch Shell, the parent company, was frustrated in one of its most ambitious global endeavors.

In 2010, the disastrous BP oil spill in the Gulf of Mexico stalled its efforts to win regulatory approval. In 2011, delays in getting final approval for an air quality permit forced the company to delay drilling.

This year, the company won almost all the regulatory approvals it needed. It recently began drilling pilot holes, and it hoped to drill at least one or two exploratory wells into deep zones that could hold oil and gas by the end of October.

The Alaskan Arctic is one of the great untapped frontiers for offshore drilling in the United States. Energy experts say the Arctic seas could produce up to a million barrels of oil a day, roughly equivalent to 10 percent of current domestic production.

Details of the dome test accident were still hazy, Shell officials said. It occurred on Saturday night in Puget Sound as part of the testing of the Arctic Challenger, a containment barge, after it was refitted in Bellingham, Wash.

The barge, a piece of Shell’s response plan for dealing with any potential oil spill in the Arctic, has caused many headaches for the company. Electrical problems, among other issues, prevented it from quickly passing Coast Guard fitness tests that were required before Shell could win final approval from the Obama administration to drill to layers deep enough to contain oil.

The containment dome, which is intended to gather spilled oil, was aboard the barge during the latest tests. Shell said a mechanical device malfunctioned on the dome as it was being lowered into the water.

“It descended to the length of its tether, and that stopped the system,” Mr. Odum said. He said the dome was taken ashore for inspections to determine the cause of the accident and the extent of the damage.

Shell said it would also investigate whether the problem involved the dome’s design or was simply a testing error. One Shell official said a preliminary inquiry into the accident suggested that some gas had become trapped in the dome, causing it to rock and rise prematurely.

At another point in the testing, a submarine robot apparently became tangled in some of the dome’s anchor lines.

The Obama administration has encouraged Shell’s drilling efforts as a way to expand domestic oil production. That support did not wane on Monday, at least not publicly. The secretary of the interior, Ken Salazar, released a statement complimenting Shell and omitting any mention of the accident.

“Through Shell’s efforts, tremendous progress has been made and valuable lessons will be learned as the company carefully and deliberately moves forward with Arctic exploration activities,” Mr. Salazar said. “As part of President Obama’s all-of-the-above energy strategy, we look forward to continuing to work with Shell.”

Environmental activists criticized both Shell and the administration.

“This reaffirms Shell was clearly not ready to drill this summer, and no matter how much the Obama administration was willing to lower the bar for them, they were not able to cross it,” said Brendan Cummings, senior counsel for the Center for Biological Diversity, one of the environmental groups that have gone to court to try to stop Shell from drilling. “It opens the door to further challenges in court and elsewhere.”

Shell has experienced a series of misfortunes since July, when a drill ship dragged anchor and went adrift, nearly striking the Alaskan shore. Only a week ago, Shell had to abandon preliminary drilling temporarily because sea ice was moving into the Chukchi Sea drilling area just a day after the work began. The company is preparing to return now that the ice has passed.

The window for drilling, which is based on ice floes and agreements to protect whales and other wildlife, closes the third week of September in the Chukchi and at the end of October in the Beaufort Sea. Shell has asked the Interior Department for an extra couple of weeks of drilling time in the Chukchi, although officials said more drilling time is less critical now.

Shell has a flotilla of ships in the Arctic waters. Officials said they still hoped to drill several pilot holes 1,400 feet deep in the two seas, the first drilling in the region in more than two decades. The company has permission to drill the preliminary holes without the containment dome and barge at the site because the company will be operating thousands of feet above zones that contain oil and gas.

The preliminary holes will eventually hold blowout preventers, the emergency equipment used to shut a well down when oil and gas surge out of control.

After this year’s drilling, the holes will be capped to await further drilling next summer. Most of the permits that Shell has spent years to obtain will carry over to next year, but the company is now shying away from predicting that it can drill as many as 10 exploratory wells in the two seas, as it originally hoped.

“We look forward to the final receipt of our drilling permits for the multiyear exploration program upon the successful testing and deployment of the Arctic Containment System,” Shell said in its statement.

This article originally appeared here.

Photo © Paul S. Hamilton