Feds ask Shell for assurances on Arctic drilling

WASHINGTON — Federal regulators scrutinizing Shell’s bid to resume Arctic drilling next summer are pressing the company for more evidence it has fixed the problems that plagued its last search for black gold in the region.

Posted on January 16, 2014 at 5:19 pm by Jennifer A. Dlouhy

WASHINGTON — Federal regulators scrutinizing Shell’s bid to resume Arctic drilling next summer are pressing the company for more evidence it has fixed the  problems that plagued its last search for black gold in the region.

In November, Shell Oil formally asked the Interior Department’s Bureau of Ocean Energy Management for permission to finish drilling one exploratory well and bore four others at its Burger prospect in Alaska’s Chukchi Sea, using a newly leased drillship to replace the Kulluk conical drilling unit that ran aground in 2012.

Regulators at the agency swiftly asked Shell to provide more information to supplement its broad drilling blueprint, including information about how quickly it could mobilize a rig to drill a relief well in case of an emergency and what steps the company would take to limit risks to nearby wildlife. After Shell responded, regulators on Tuesday asked for more details in a document released Thursday.

The ocean energy bureau asked Shell to shed more light on changes under way to its leased drillship, the Noble Discoverer, which is being overhauled in an Asian shipyard. The Coast Guard identified deficiencies with the safety, pollution-control and propulsion systems on the Discoverer in late 2012, after the drillship had trouble pulling into Seward, Alaska.

Shell also agreed to pay $1.1 million in fines to settle claims that it violated air pollution permits during its 2012 Arctic operations, largely because of excess nitrogen oxide released from the Discoverer.

The agency  made clear it wants Shell to demonstrate it won’t let similar problems go unnoticed and unfixed if it is allowed to drill in the region again.

“(The bureau) is seeking assurance from Shell that not only have the physical deficiencies been resolved, but also if Shell’s management (and) oversight deficiencies … have been fixed,” the agency said in its formal request for more information. “What adjustments has Shell made to its project management, implementation (and) assurance plans to ensure that operational deficiencies, should they occur in the future, will be quickly detected in fixed?”

The agency also wants more evidence that there is no permafrost located below the subsurface at its proposed drilling sites — a situation that  would require the use of specially cooled drilling fluids to prevent melting.

And the regulator asked for more details on some of Shell’s plans for dealing with well control emergencies.

Shell declined to comment Thursday. But in a November filing, the company argued it could operate safely in the harsh Arctic environment.

“Shell … builds its 2014 plans on a solid foundation of practical operational experience in the region,” the company said in its integrated operations plan. “Assets have been carefully selected to operate in Alaskan offshore conditions, in addition to employees and contract personnel being trained for these conditions.”

Environmentalists have blasted that assertion, arguing that it seems to completely overlook the high-profile mishaps during Shell’s 2012 drilling season.

Shell appears to have addressed many of the questions regulators first raised about the company’s 2014 proposal in November, pushing the agency closer to a formal declaration that the proposed exploration plan’s paperwork is complete.

Once the agency deems the exploration plan “submitted,” the bureau will have 30 calendar days to reject or approve it.

If the agency ultimately were to approve the plan, it likely would require Shell to meet a host of conditions  governing air permits, times when drilling can take place and oil spill response. The company still would still have to get individual well drilling permits from a separate Interior Department agency, secure wildlife and marine mammal permits and get the Coast Guard to sign off on its drillships, among other required steps.

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