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GAO finds Arctic offshore-drilling risks despite toughened oversight

Congressional auditors say in a newly released report that oil giant Royal Dutch Shell’s plans to drill in Arctic waters off Alaska’s coast will present environmental risks, despite the company’s plans to prevent and contain accidents.

By Ben Geman – 03/30/12 01:26 PM ET

Congressional auditors say in a newly released report that oil giant Royal Dutch Shell’s plans to drill in Arctic waters off Alaska’s coast will present environmental risks, despite the company’s plans to prevent and contain accidents.

The Government Accountability Office, in a wider report on Interior Department offshore regulation, concludes that federal officials will face “challenges” providing “sufficient oversight.”

While the findings echo previous analyses of the risks of drilling in remote Arctic seas, they’re likely to provide more political ammunition to environmentalists and some Democrats who don’t want Interior to approve Shell’s plans to begin drilling this summer.

“Even with Shell’s plans to have dedicated capping stack and well containment capabilities in the region to provide rapid response in the event of a blowout, these dedicated capabilities do not completely mitigate some of the environmental and logistical risks associated with the remoteness and environment of the region,” the GAO states in its report, which was completed in February and released Friday by two senior House Democrats.

For instance, the risks include surface ice that could hinder response if a blowout occurred late in the envisioned July-October drilling window.

“A regional drilling expert told us that if a blowout occurred late in the season, icy conditions in November and December could make well containment challenging,” the report notes. “Shell plans to maintain an icebreaking vessel at each drilling site to conduct ice management operations, but these conditions could still pose a challenge to well containment response.”

Shell has for years been pushing for federal approval to begin drilling its leases off Alaska’s northern coast that the oil giant has spent billions of dollars to obtain and develop.

Interior on Wednesday approved Shell’s oil spill response plan for the Beaufort Sea, which follows the February approval of the company’s response plan for the adjacent Chukchi Sea.

Shell hopes to begin exploratory drilling in the seas this summer but still needs other federal approvals, including drilling permits.

The company says it has engaged in robust accident prevention and spill response preparations.

“We maintain that the unprecedented amount of time, technology, and resources we have dedicated to preparing for an extremely unlikely worst-case scenario makes Shell’s oil spill response plan second to none in the world,” Shell said in a news release touting Interior’s approval of the Beaufort Sea spill response plan this week.

“That plan includes the assembly of a 24/7 on-site, near shore and onshore Arctic-class oil spill response fleet, collaboration with the U.S. Coast Guard and a newly engineered Arctic capping system,” Shell said.

But Emilie Surrusco, a spokeswoman for the Alaska Wilderness League, said the GAO findings add to the case against allowing Shell to begin drilling this year.

“GAO is a respected institution. It is important that they are saying this,” she said. “There is some very severe environmental and logistical challenges in the Arctic that have not been addressed adequately.”

The report notes that because more Interior review will occur before Shell is given potential permission to proceed, “it is too early for us to evaluate Interior’s oversight of oil and gas development and well containment capabilities in Alaskan waters.”

“However, the existence of different types of risk and the limited response infrastructure pose additional challenges Interior will have to address to conclude that it is providing sufficient oversight,” GAO found.

Interior’s Bureau of Safety and Environmental Enforcement (BSEE), for its part, is pledging to thoroughly review Shell’s preparations before allowing any drilling.

“Shell has proposed a well control containment capability that consists of a combination of a subsea capping stack, and surface separation equipment that will be located on a newly built containment vessel, all of which will be inspected by BSEE prior to the beginning of any proposed operations,” the agency noted this week.

The GAO’s findings on Arctic drilling are part of a wider review of Interior’s toughened oversight and regulation of industry accident planning in the wake of the 2010 BP spill.

Interior has greatly beefed up oversight of oil-and-gas drilling in the Gulf of Mexico — and potential Arctic offshore drilling — in the wake of the 2010 BP disaster.

The GAO report notes that Interior has tested Gulf offshore drillers’ well-containment response in two unannounced “spill drills” and intends to conduct such tests in future drills with companies.

“However, Interior has not documented a time frame for incorporating these tests, and until it does so there is limited assurance of an operator’s ability to respond to a subsea well blowout,” the report states.

Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.) released the report Friday.

Waxman is the ranking Democrat on the House Energy and Commerce Committee, while Markey has the top Democratic slot on the Natural Resources Committee.

“GAO found we currently have just ‘limited assurance’ that oil companies can stop offshore well blowouts. Two years after the disaster in the Gulf, that’s not good enough,” Waxman said in a statement. “The risks are especially high in Alaska because of the unique environmental and logistical problems.”

A top Interior official said in a written response to the report that Interior concurs with the GAO recommendation about creating a time frame for incorporating “well containment response scenarios” into future unannounced “spill drills.”

In the response included with the GAO findings, Acting Assistant Interior Secretary for Land and Minerals Management Marcilynn Burke notes that Interior believes that these “response scenarios” that test companies’ handling of possible subsea blowouts should be a regular part of annual plans for future drills.


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