Thursday, February 28, 2013

Shell Backs Off Arctic Alaska Drilling For Now

Feb 27: Royal Dutch Shell plc (Shell) announced it will "pause its exploration drilling activity for 2013 in Alaska's Beaufort and Chukchi Seas [See WIMS 9/5/12] to prepare equipment and plans for a resumption of activity at a later stage." Marvin Odum, Director, Upstream Americas said, "We've made progress in Alaska, but this is a long-term programme that we are pursuing in a safe and measured way. 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."

    In a release Shell indicated that Alaska holds important energy resources. At the same time, securing access to those resources requires special expertise, technology and an in depth understanding of the environmental and societal sensitivities unique to the region. Shell is one of the leaders in an industry move into offshore Arctic exploration. The company continues to use its extensive experience in Arctic and sub-Arctic environments to prepare for safe activities in Alaska. 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. If exploration proves successful, resources there would take years to develop.

    Shell completed top-hole drilling on two wells in 2012 in the Beaufort and Chukchi Seas, marking the industry's return to offshore drilling in the Alaskan Arctic after more than a decade. This drilling was completed safely, with no serious injuries or environmental impact. After the drilling season ended, however, one of Shell's drilling rigs, the Kulluk, was damaged in a maritime incident related to strong weather conditions. The Kulluk and the second drilling rig, the Noble Discoverer, will be towed to locations in Asia for maintenance and repairs.

    Odum said, "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. We continue to believe that a measured and responsible pace, especially in the exploration phase, fits best in this remote area.

    U.S. Senator Lisa Murkowski (R-AK), the Ranking Member on the Senate Energy and Natural Resources Committee, released a statement saying, "I have been a strong supporter of Shell's activities in the waters off Alaska's northern coastline and in energy exploration in general, but I have always said that it must be done to the highest safety standards. Shell's decision to postpone this summer's exploratory drilling program shows that it shares that 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."

    Representative Ed Markey (D-MA), the Ranking Member on the House Natural Resources Committee, who has been questioning and exposing issues with Shell's Arctic endeavors said this was the right decision on the part of Shell, and asked the Department of Interior to expand its current expedited review of Arctic drilling prospects, given additional time this postponement now allows. He indicated among the incidents were catastrophic failures of proposed containment systems, one of two drilling ships running aground while being towed through a storm to avoid tax considerations, and another ship receiving 16 safety and performance violations. Rep. Markey said, "After bumbling through a year of mishaps, beachings, and complete safety failures, it's clear that Shell and the oil industry were 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."

    A number of environmental organizations issued statements including Greenpeace, Earthjustice, Wilderness Society, Center for Biological Diversity, Sierra Club and others (See links below). Greenpeace said it welcomed the announcement and Phil Radford, Greenpeace USA Executive Director said in response said, "This is the first thing Shell's done right in Alaska -- calling it quits. Shell was supposed to be the best of the best, but the long list of mishaps and near-disasters is a clear indication even the 'best' companies can't succeed in Arctic drilling. Secretary Salazar and President Obama gave drilling a chance; now the responsible decision is to make Arctic drilling off limits, forever. . . "Shell's announcement today is an admission that the millions of people around the world were right to urge Obama to keep the company out of the Arctic. Now Obama needs to listen to the 2.7 million people who have signed on to #SaveTheArctic and make Arctic drilling off-limits forever."

    Earthjustice President, Trip Van Noppen, issued a statement saying, "Shell did the only thing it could do -- suspend Arctic drilling and halt operations for oil exploration this summer. Whether it was the Kulluk's grounding, the problems both drilling operations had with Arctic weather and ice, or the total failure of their oil spill containment system, Shell's drilling effort last summer demonstrated with vivid clarity that the oil industry is not ready to drill safely in the Arctic Ocean. The administration should take the time it needs to perform a thorough assessment of Shell's operations last summer, rather than a rushed review that fails to address the systemic failures -- both of the industry and the Department of the Interior. The Obama administration should now suspend all permitting and further activities related to Arctic drilling in America's waters until it completes a thorough review and determines a more responsible approach for the Arctic Ocean."

    Access a release from Shell (click here). Access a release from Senator Murkowski (click here). Access a release from Rep. Markey with links to his previous inquiries (click here). Access the statement from Greenpeace (click here). Access a release from Earthjustice (click here). Access a release from Wilderness Society including images and a chronology of events (click here). Access a release from Center for Biological Diversity (click here). Access a release from Sierra Club (click here). [#Energy/OCS]

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