Shell’s Arctic Drilling Venture Stumbles Toward Reality

Posted: 07/17/2012 12:45 pm

Royal Dutch Shell, the global energy giant, has already invested more than $4 billion in its Arctic drilling venture, but that was apparently not enough to purchase proper mooring in Alaska’s Dutch Harbor and avoid a subsequent public relations mess.

Precisely what happened is still being sorted out. Official accounts had the Noble Discoverer, one of two massive drilling rigs that Shell had parked midway up the Aleutian Island chain, dragging anchor in stiff winds over the weekend before coming to a halt 100 yards offshore.

Locals, including a shutterbug harbor captain, disputed that scenario and lit up Twitter and Facebook with photographs showing the rig all but on the beach.

“There’s no question it hit the beach,” Kristjan Laxfoss, the harbor captain, told The Associated Press on Sunday. “That ship was not coming any closer. It was on the beach.”

Whatever the reality, and while Shell plans to send divers down later this week to inspect the hull, no damage to the rig has yet been reported, and the incident appears to have had no environmental impact.

But for a company embarking on what is arguably among the most watched and most contentious oil and gas ventures in recent memory, the image of shore-based personnel scurrying toward a drifting and uncontrolled rig is embarrassing at best, and inauspicious at worst.

It is also a chilling reminder that, despite the most careful planning, things can go awry.

“Our goal remains flawless operations,” the company declared in a statement posted to its website. “Even a ‘near miss’ is unacceptable. While an internal investigation will determine why the Discoverer slipped anchor, we are pleased with the speed and effectiveness of the mitigation measures we had in place.”

Opponents of Arctic drilling were unmoved. “For us,” said Travis Nichols, a spokesman for Greenpeace, “it’s a clear warning sign that Shell isn’t prepared to go up there.”

“Up there” is the unforgiving Chuchki and Beaufort seas, still more than 1,000 miles northeast of Dutch Harbor, along Alaska’s northern coast. That’s where the Noble Discoverer and its sister rig, the Kulluk — along with dozens of support vessels — aim to soon hunker down, between 20 and 70 miles offshore, where they will begin poking exploratory holes in the seabed in the hope of finding oil.

With visions of oil-soaked beaches and BP’s flaming Deepwater Horizon rig still fresh in the minds of many Americans — as are more than two decades of environmental impacts arising form the 1989 Exxon Valdez spill in Alaska’s Prince William Sound — opposition to Shell’s Arctic ambitions has been fierce. In response, the company has pulled out all the stops in touting its experience in northern waters, including exploration wells it plumbed in the Chuchki and Beaufort the 1980s and ’90s, before low oil prices prompted it to focus on the Gulf.

Shell has also argued that, unlike BP’s operation in the Gulf of Mexico, which was groping in waters nearly a mile deep and drilling to depths of 18,000 feet, the Beaufort and Chuchki operations will be working in comparative shallows of 140 feet or so, and drilling to roughly 10,000 feet or less. Well pressures in the Arctic are also expected to be far lower, the company has said, making the sort of wild, unchecked gusher that BP experienced unlikely.

Meanwhile, the payoff could be substantial: Federal officials currently estimate that the shelf under the Chuchki and Beufort seas contains more than 26 billion barrels of recoverable oil, and 130 trillion cubic feet of natural gas. An economic analysis, prepared by a consultancy on behalf of Shell last year, estimated that employees in Alaska would draw some $63 billion in payroll, and another $82 billion would accrue to workers in a variety of ancillary and downline jobs across the U.S. Local, state and federal governments would draw billions in revenues, the report reckoned.

Just how reliable such projections might be is an open question, but it is certain that should Shell’s gamble prove successful, other companies will follow. Towns will swell to cities, shipping corridors will expand, pipelines will be built, and historic levels of economic activity will stir to life at the nation’s northern frontier.

None of this, of course, has impressed environmental advocates. Just last week, a coalition of organizations filed suit in an Alaska federal court, arguing that the Obama administration’s approval of Shell’s spill response plans, which the groups consider inadequate, amounted to a rubber stamp.

Previous legal challenges to Shell’s plans, however, have proven unsuccessful, and Curtis Smith, a spokesman for Shell, said in an email message that the company was confident that regulators had thoroughly reviewed its oil spill response plans. “The bottom line is, regulators at the highest level have looked very closely at these plans,” Smith said. “They have confidence in these plans and if they did not, we would not be on the doorstep to drilling in Alaska.”

They are most certainly on the doorstep. Barring the unforeseen, it is highly likely that at some point in early August — assuming unusually long-lingering sea ice ultimately clears — Shell’s rigs will be in position and drilling will commence.

In the meantime, Greenpeace, which is party to last week’s lawsuit, is spearheading efforts to collect baseline data on the areas where Shell plans to work, dispatching a pair of manned submersibles to collect seabed samples, as well as photographs and video of the ecosystem beneath the chilly Arctic waters, before Shell’s drill rigs arrive.

Whatever your thoughts on oil exploration in the Arctic, this would seem a crucial enterprise — not least because Shell has hit other bumps in the race to begin work while the ice-free drilling window, which lasts roughly from July to October, remains open. Among these: concerns raised by the Coast Guard that its Arctic Challenger spill barge, designed to handle rough seas and ice hazards, as well as tackle any accidental spill, is not ready for prime time.

Shell officials have reportedly argued that the Arctic Challenger should be held to less rigorous standards. They requested similar dispensation from the EPA on Friday, saying the operation would be unable to meet air pollution standards set by the agency. The EPA is weighing the request.

All of this worries environmental activists, who suspect that Shell is knowingly playing a game of bait and switch, in which the company agrees to rigorous standards up front, and then slowly begins chipping away at them after its drilling fleet is en route.

But even if Shell’s recalibrations are honest ones, and its missteps — including the runaway drill rig this weekend — forgivable, such turns do little to instill confidence among folks who worry about the future of one of the world’s last undeveloped environments.

It is an ecosystem like no other, and the seas and shores skirting Alaska’s North Slope teem with life — migrating whales, walrus, seals, polar bear and a variety of seabirds. Eskimo populations in the area, meanwhile, are almost completely dependent on this fauna for survival, particularly during the long, harsh winters. And all of it is very delicately balanced.

“The Arctic ecosystem is so different from the other ecosystems that we’re used to dealing with, because there are so few inputs,” said Greenpeace’s Travis Nichols. “In a place like the Amazon, not that you’d want to damage the Amazon, but if you do, there’s so much biodiversity and so many species there that can help to correct the web. In the Arctic, if you mess one thing up, you mess up the whole thing.”

One could reasonably argue that the whole thing is already being messed up by global warming, which has been causing summer sea ice to retreat to record levels. That this very phenomenon — driven in part by our voracious appetite for fossil fuels — is now making oil exploration and development more feasible is an irony not lost on critics.

But these forces, both economic and climatic, are proving all but impossible for clean-energy and environmental advocates to curb — making careful monitoring of any oil boom in the Arctic all the more crucial.

For its part, Shell has taken steps to limit the ability of Greenpeace to disrupt things directly (as is its wont), securing a restraining order that requires the group to keep well clear of the oil giant’s vessels in the Arctic.

Taking things further, Republican Sen. Lisa Murkowski of Alaska co-authored a pair of letters to federal officials last week, complaining about Greenpeace and asking that further protest be curbed. In a bizarre twist, Murkowski also requested that the environmental impacts of Greenpeace’s own activities be scrutinized and regulated.

Such is the rhetorical pitch as one of the planet’s last truly pristine environments stands on the precipice of a new era of industrialization. Given its track record so far, Shell will need to work doubly hard to convince skeptics that it is can lead the way safely.

“So much effort and treasure has been expended to get to the point where twenty vessels are in Dutch Harbor ready to advance to the Chukchi and Beaufort Seas to begin drilling test wells,” an editorial in The Dutch Harbor Telegraph declared after this weekend’s gaffe. “Greenpeace doesn’t have to say a thing. Shell has said it all.”

This article has been updated to include additional comment from a Shell company spokesman.

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