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Shell ordered to fix ship going to Arctic

By Jennifer A. Dlouhy: Published 10:53 p.m., Friday, July 6, 2012

WASHINGTON – Shell’s plans to search for oil under Arctic waters this summer – already delayed by thick ice clinging to Alaska’s shores – may face another setback as the company makes Coast Guard-ordered improvements to a barge designed to carry emergency response equipment.

During evaluations of the Arctic Challenger barge, still in its final stages of construction in a Bellingham, Wash., shipyard, the Coast Guard found problems with electrical and fire suppression systems that must be fixed before the agency will issue a required certificate of inspection.

The barge, owned and operated by Superior Energy Services, is to be anchored between Shell Oil’s Chukchi and Beaufort Sea drilling sites, ready to move to either location in case of a spill.

John Haney, Shell’s project development and construction manager, cast the Coast Guard’s to-do list as “normal construction issues that come up as we build these and they need to be modified to meet their requirements.” Shell has not yet sought a certificate of inspection for the Challenger, he said.

Coast Guard Cmdr. Chris O’Neil also signaled the deficiencies were common.

“These things combined together were not unexpected, but they take time to clear,” O’Neil said.

Shell Alaska Spokesman Curtis Smith said addressing the Coast Guard-identified problems would not delay operations. A much bigger challenge is the thick layers of ice still clinging to Alaska’s northern coast, he said.

The company now anticipates that it won’t be able to move into the area and begin drilling until the first week of August, about three weeks after the earliest start date allowed under federal regulations, July 15.

“We’re still seeing significant sea ice over both prospects,” Smith said. With an already-short window for exploratory drilling, “there’s a premium on every day we can drill, so that is disappointing.”

Separately, Shell plans to ask the Coast Guard to classify the Arctic Challenger barge as a mobile offshore drilling unit, rather than as a floating production installation that isn’t meant to move out of the way during hurricanes and other storms. That would mark a change from Shell’s December 2011 request to the Coast Guard to classify and evaluate the barge as a floating production installation, or a fixed facility.

If allowed, the change would prompt a different analysis of the vessel but would not ease requirements, O’Neil said. Under either classification, Shell has to address the fixes the Coast Guard has ordered.

“The barge either complies with the standards we say are acceptable or it doesn’t,” O’Neil said, “and if it doesn’t, it doesn’t get its certificate.”

The barge’s role is unique, making it difficult to peg under American Bureau of Shipping classifications.

Although it will be anchored in Arctic waters, the Challenger barge isn’t designed to stay put, like floating production facilities that are required to be able to withstand hurricanes and heavy storms. If there were an oil spill in the region, the barge is meant to move to the scene.

The shipping bureau suggested the mobile offshore drilling unit designation would be a better fit, Haney said.

That certificate of inspection is part of a chain of final government approvals before Shell can launch its planned drilling.

Regulators at the Interior Department already approved Shell’s broad drilling blueprints for the region and the company’s plans to tackle any oil spill in the area. But regulators have made clear that all aspects of that oil spill response plan must be certified and functioning before they would issue permits to drill individual wells in the Chukchi and Beaufort seas.

Because the Arctic Challenger is set to hold oil spill response equipment, including a system for containing a runaway underwater well, it is a key vessel in Shell’s two-dozen-ship flotilla.

Some of those ships, including the Kulluk and Noble Discoverer drilling units, have been sent to Dutch Harbor, Alaska, where they will wait for ice to clear before traveling north of the state.

Environmental advocates have battled Shell’s drilling plans, saying the initiative is too risky in remote and slushy Arctic waters. An oil spill could damage the fragile Arctic ecosystem irrevocably, they argue, forever jeopardizing whales, walruses and other marine life – as well as the native Alaskans who depend on them for food.

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