Christopher Helman, Forbes Staff: I’m based in Houston, Texas. Energy capital of the world.
Royal Dutch Shell is taking flack from all directions today as a team of salvage experts try to figure out how to free the $290 million Kulluk floating drilling rig that ran aground on the coast of Alaska Monday. The crew of the Kulluk has been rescued, and thanks to a 3-inch steel hull none of the diesel fuel onboard has spilled. But this latest fiasco in a long line of mishaps further underscores the risks of exploring for oil in the Arctic Chukchi and Beaufort seas.
Shell has sunk more than $5 billion into its Alaskan venture since acquiring leases for $2 billion four years ago, and has precious little to show for it. In 2010, when Shell thought it was ready to go, it was stopped by the federal offshore drilling moratorium in the wake of BP‘s disaster. Then there were years of delays as Shell made improvements to the Kulluk rig to meet draconian EPA regulations on diesel emissions. Then in 2012 Shell faced permitting delays on its Arctic Challenger barge, which is to meant to help capture oil in the event of a Deepwater Horizon-style blowout. Worse, the Challenger was damaged during testing in Washington state, requiring weeks of repairs. In July the anchors of the Kulluk’s sister ship, the Noble Discoverer, came loose and dragged across the seafloor. In the short drilling season between July and October, Shell managed only to begin drilling two wells, in the Berger and Sivulliq prospects, before having to pull up and clear out before ice set in. It only got that little bit of work after the Bureau of Ocean Energy Management approved Shell’s request that it be allowed to drill a little later into the season than is generally thought wise.