ARCTIC:

Drilling plans in rocky waters as Shell rig towed to harbor

Royal Dutch Shell PLC's drillship Kulluk was hauled off the rocky shores of Alaska's Sitkalidak Island late Sunday night, triggering a new round of questions about the condition of the massive drill rig and how its grounding could affect Shell's long-term hopes of oil drilling this summer in the American Arctic.

Now anchored in the protected harbor of Kiliuda Bay, the Kulluk will undergo extensive inspection of its hull and internal equipment to determine the level of damage that it sustained when beached near Kodiak since New Year's Eve.

"We were not able to do that level of assessment while it was aground," Shell's Alaska operations manager Sean Churchfield noted yesterday.

So far, the Kulluk has received a relatively clean bill of health. Rescuers using infrared equipment said they detected no oil sheen in the water at the grounding site nor near the drilling unit as it was towed 45 miles to harbor. The 266-foot-long conical rig contains about 150,000 gallons of diesel and other petroleum liquids.

Last week, Shell reported that the rig had suffered wave damage to its deck and that some of its watertight doors had been breached, allowing seawater to enter the rig. The Kulluk also lost use of its generators (EnergyWire, Jan. 4).

Once the extent of the Kulluk's damage is assessed, the rig may be hauled to another location that would have more extensive repair facilities, Churchfield said. "We may have to move it again, just depending on the repairs, the logistics and the requirements that we have," he noted.

The U.S. Coast Guard has also begun clearing the rig's life boats and other debris from Sitkalidak Island. Noting that the life boats contain fuel, Coast Guard officials said they would conduct oversight flights to look for oil leaks and other potential environmental impacts.

The Kulluk ran aground in late December after breaking free from tugboats leading it to Seattle for maintenance. The incident occurred as high waves and heavy winds whipped through the Gulf of Alaska and one of the rig's tow vessels lost power.

As the Kulluk was hauled to safe harbor, environmental activists raised concerns about the rig's potential impact on the wildlife in Kiliuda Bay. The region contains critical habitat for endangered Steller sea lions and threatened sea otters and is home to a wide variety of sea life and birds.

The grounding incident was the latest in a series of equipment mishaps and regulatory problems that Shell's two Arctic drillships, the Kulluk and the Noble Discoverer, faced this year as Shell sought to drill for oil along Alaska's northern shores.

Those equipment failures prevented Shell from securing oil drilling permits on its Beaufort and Chukchi sea leases. Instead, the rigs were limited to drilling preliminary top holes at the sites.

Depending on the condition of the Kulluk, Shell could face serious questions about its 2013 drilling plans. The company's federal permits require two drilling rigs to be available in the region as a safeguard, should it be necessary to drill a relief well in the case of a blowout at one of the sites.

If the Kulluk is not repaired and ready for operation by spring, Shell will have only the Discoverer available for Arctic operations.

The Kulluk grounding incident is raising new calls for the federal government to take a closer look at Shell's operations and to adopt tough Arctic-specific operating standards for future oil development in the region.

"People need to step back and say this was a serious incident, probably life-threatening for the crew, but unfortunately, it was just one maritime accident in a suite of incidents that we've seen since summer," noted Eleanor Huffines, who manages the Pew Environment Group's U.S. Arctic program.

Those concerns will be on the agenda at the Interior Department's Ocean Energy Safety Advisory Committee meeting tomorrow and Thursday in Washington, D.C. Interior Deputy Secretary David Hayes is expected to address the group Thursday.

Meanwhile, drilling opponents, noting that Shell has spent $5 billion thus far on its quest to drill for oil in the Alaska's Arctic, suggest that the Kulluk grounding could spark protests among Shell stockholders.

"The Kulluk incident has raised many glaring safety issues and serious questions must be asked of the company's decision-making," Greenpeace Arctic campaigner Ben Ayliffe said in a statement.

"Investors will be watching this latest mishap and asking how much longer Shell can persevere with a multi-billion dollar Arctic drilling program that has been characterized by one glaring operational blunder after another."

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