Shell Throws In The Towel on Alaska Drilling in 2013

It’s official

Feb 27 (Reuters) – Royal Dutch Shell will not be drilling for oil in Alaska’s Beaufort and Chukchi Seas this year, the company said on Wednesday, a widely expected decision that follows a series of setbacks in the 2012 season.
“Our decision to pause in 2013 will give us time to ensure the readiness of all our equipment and people,” said Marvin Odum, director, Upstream Americas.
Shell has spent more than $4.5 billion on its search for oil in the Chukchi and Beaufort seas since it won licences to drill there in 2005. Its 2012 season ended with the grounding of one of its two drillships after a storm while it was being towed to Seattle for the winter.
The company said earlier in February that its two rigs would head to Asia for repairs and upgrades, casting further doubts on its plan to do any drilling off the state’s coast this year.
The departures, expected within weeks, will draw a curtain on the rigs’ accident-prone first year at work in the Arctic.
Shell’s multi-billion-dollar move into the environmentally sensitive U.S. waters – the first since the Macondo disaster of 2010 – is being watched closely by the industry.
Even before the Kulluk drillship ran aground near Kodiak Island on Dec. 31 after escaping its tow lines, the 2012 drilling program was stalled by troubles with support vessels and regulatory scrutiny of the other rig, the Noble Discoverer, which belongs to Noble Corp.
After the Arctic drilling season closed at the end of October, a fire then broke out on the Discoverer.
There were even engine failures on the Aiviq, the specially designed ship pulling the Kulluk, before it lost its tow connection.

Here’s Workboat Magazine’s take on Shell’s Alaska ambitions

[B]Shell’s game not ready for Arctic[/B]
Bruce Buls
February 28, 2013

In the March issue of WorkBoat magazine, we review the problems that have plagued Royal Dutch Shell’s attempts to drill for oil in the Arctic Ocean. The most notorious example of its woes is the Gulf of Alaska grounding of the drilling rig Kulluk on New Year’s Eve, but that was only one of many stumbles that have eroded confidence in the company’s competence.

Shell has publicly boasted that it’s “Arctic ready,” but it clearly was not “Gulf of Alaska ready.” And with what’s come to light recently, I don’t think it was Arctic ready, either.

Last Friday, the Anchorage Daily News reported that the Coast Guard found 16 “serious safety and environmental violations” on the Noble Discoverer, Shell’s other drilling rig for Arctic operations. The results of the Coast Guard’s investigation have been turned over to the Justice Department, which has joined the Coast Guard and the Department of Interior in scrutinizing Shell’s practices in Alaska.

In our March cover story, we quote Rick Steiner, a citizen watchdog in Anchorage who has been digging into Big Oil’s Alaska activities ever since the Exxon Valdez accident in 1989. “They promised Alaska and the nation that they are bringing their ‘A’ game here,” he told us, “and obviously they haven’t.”

Exactly. The 514’x71’ drillship Noble Discoverer is almost 50 years old. It was built as a log carrier in 1966 and rebuilt as a drillship 10 years later. It was upgraded in 2009. Sure, Shell has spent millions trying to upgrade the ship for its Arctic operations, but that hasn’t been sufficient, obviously. Now it needs to have new or rebuilt engines.

The 30-year-old, heavily built Kulluk drill barge may ultimately be acceptable as an Arctic drilling rig, but no one would categorize it as state-of-the-art. It was being towed to Seattle to get its cranes rebuilt and other work when its towing vessel couldn’t hang on during a winter storm.

Add in a crushed containment dome during sea trials of its blowout recovery equipment in Puget Sound last fall and you’ve got a pattern of problems that give pause to even the most ardent supporters.
This is the best that Shell can do? One of the richest companies in the world?[/U][/B]

We keep hearing about all the new drilling rigs being mobilized to the Gulf of Mexico. Why didn’t Shell have new rigs purpose-built for its Arctic exploration? Instead, it brought in an ancient drillship that had to be towed into Seward, Alaska, last fall due to propulsion problems.

Shell has just announced that it will suspend Arctic drilling operations in 2013. Well, duh. Its two drilling rigs are both headed to Korea for extensive repairs as winter turns to spring. There’s no way they could be repaired, approved and put back in service by this summer.

Shell really needs to get its act together before bumbling into another season. If another round of errors results in oil spilled or lives lost, which is all too possible, it may not get another chance and it won’t deserve to.

Very well stated Mr. Buls and I thank you.

Here’s Workboat Magazine’s take on Shell’s Alaska ambitions

Nothing that hasn’t been said here. They must read gCaptain…