U.S. legal action sought over Shell drillship violations

(Reuters) – U.S. federal prosecutors have been asked to take legal action over safety and environmental violations discovered on one of two drillships Royal Dutch Shell used last year in Arctic waters off Alaska, officials said on Monday.

The violations were discovered in November by Coast Guard inspectors on the Noble Discoverer, a drillship contracted from Noble Corp to work on Shell leases in the remote Chukchi Sea off northwestern Alaska.

Coast Guard Chief Petty Officer Kip Wadlow said the Justice Department was now in charge of any potential sanctions against Shell or Noble, and Assistant U.S. Attorney Kevin Feldis confirmed it was now in the department’s hands.

“It’s too early to know where that investigation and review will lead,” Feldis said.

In its annual report released on Monday, Noble said it was cooperating with both agencies in their investigation.

“Based on information obtained to date, we believe it is probable that we will have to pay an amount to resolve this matter,” Noble said. “However, we are not in a position to estimate the potential liability that may result.”

A Noble spokesman was not immediately available to comment.

Details of the Discoverer’s 16 specific violations cited by the Coast Guard were released on Friday by U.S. Representative Ed Markey, a critic of Shell’s operations. See: link.reuters.com/pyf36t

Among the cited violations are problems with the rig’s main propulsion system, frequent engine backfires, lapses in fire-safety systems and lapses in waste-oil separation and management, according to the document released by Markey.

The Discoverer was inspected in the Alaska port of Seward and subject to a detention order, which has since been lifted, requiring it to stay in that port.

Shell spokesman Curtis Smith said Noble had already addressed some of the deficiencies found by the Coast Guard, and that there had been no risks presented by Shell’s preliminary drilling on its Burger prospect last year.

“At no time was the Noble Discoverer found or believed to be a danger to people or the environment while drilling in the Chukchi Sea in 2012,” Smith said in an email. “Had that been the case, we would have ceased all operations immediately.”

The Discoverer remained in Seward on Monday, where it was awaiting arrival of a vessel to transport it to a Korean shipyard for repairs, Smith said. The plan was to have it “dry towed,” or loaded onto the transporting vessel, he added.

Meanwhile, the Kulluk, a Shell-owned drillship that started a well in the Beaufort Sea off northern Alaska, awaits its own transport to Asia. It was damaged after it broke away from tow lines during a transport across the Gulf of Alaska and grounded off Sitkalidak Island in the Kodiak archipelago on December 31.

The Kulluk remains anchored in a sheltered Kodiak Island bay, Smith said, though the Coast Guard two weeks ago gave Shell permission to tow it away. Smith said the ship would head to the Aleutian Island port of Unalaska/Dutch Harbor when weather allows, and from there it will be dry-towed to Asia for repairs.

The Justice Department investigation follows months of missteps by Shell, which has spent close to $5 billion in its high-stakes bid to explore for oil in remote Arctic waters.

Prior to the Kulluk grounding, the Discoverer had a near-grounding in Unalaska, before it went to the Chukchi. The rig then had a small explosion and fire after returning from the drill site.

Both rigs were cited by the Environmental Protection Agency for air-pollution violations. Drilling last year was limited because Shell could not get a mandatory oil-spill response vessel to meet Coast Guard standards until late autumn; a key piece of equipment on that ship was damaged in sea trials.

(Additional reporting by Braden Reddall; Editing by Bob Burgdorfer)

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