Shell hits snags in path to Arctic drilling

Shell’s plans to launch exploratory oil drilling in Arctic waters this summer have been hit by a series of setbacks in recent days, with one of the company’s drillships drifting out of control and the firm separately admitting it won’t be able to comply with the terms of a government-issued air pollution permit that took years to refine.

The developments mark the most recent troubles for Shell Oil Co.’s seven-year quest to begin a new era of drilling in the Chukchi and Beaufort seas, decades after first searching for oil under those Arctic waters.

Mother Nature has already postponed the company’s plans to drill up to five wells in the region until early August, because thick ice is still clinging to Alaska’s shores, preventing ships from passing through the area.

Shell spokesmen say they don’t expect further delays to the company’s plans after one of the firm’s drillships, the Noble Discoverer dragged its anchor and drifted toward an island near Dutch Harbor, Alaska on Saturday.

Later this week, divers are expected to investigate the vessel’s hull for signs of damage amid wide-ranging reports about how close the ship came to shore.

According to initial estimates, the ship stayed 100 yards away from the shoreline, but in a photo taken by a Dutch Harbor captain, the 571-foot ship appears to have run aground much closer to land.

Coast Guard officials are already reviewing photos of the hull taken by a remote-operated vehicle on Sunday. And Coast Guard personnel were set to conduct an investigation aboard the vessel on Monday, according to Petty Officer Sara Francis.

“All indications are that it did not run aground,” said Shell spokeswoman Kelly op de Weegh. “But our priority is to make sure there are no integrity issues with the Discoverer. That’s why we’re going to send divers down as another precaution.”

At the time, the Discoverer was held by a single anchor to the seafloor about 500 to 570 yards away from shore, where it waits for ice to clear before heading north. When drilling in the Arctic this summer, Shell plans to suspend the vessel over three exploratory wells using an eight-anchor mooring system.

That gave little comfort to conservationists who already have raised concerns with Shell’s Arctic drilling plans.

“Shell can’t keep it’s drill rig under control in a protected harbor,” said Jackie Dragon, Greenpeace’s lead Arctic campaigner. “What will happen when it faces 20-foot swells and sea ice while drilling in the Arctic?”

Shell also has drawn fire for asking the Environmental Protection Agency for leeway after determining it would not be able to comply with emissions limits in key air pollution permits governing its Arctic operations.

According to a request filed with the EPA late on June 28, Shell is asking to be allowed to emit an unlimited amount of ammonia and more nitrogen oxide than originally permitted from the main generator engines on the Discoverer.

At one point, Shell told the EPA in its request, the company had spent nearly $24 million trying to buy, install and test an emission-control system that would allow the engine to meet the approved limits and still fit into a tight space in the Discoverer’s engine room.

Shell’s op de Weegh stressed that the Discoverer will still satisfy ambient air standards for nitrogen oxide since the generator engines are not the biggest source of that substance. Even doubling the amount of nitrogen oxide initially allowed from the engines would not cause Shell to exceed overall limits for the ship, op de Weegh said.

The EPA is considering Shell’s request for a compliance order that would allow the Discoverer to operate in 2012 but would require considering permit revisions for next year. Although a public comment period would follow any future revision reviews, the compliance order would not be subject to that.

Environmentalists have pleaded with the EPA to reject the request, which they say will set guideposts for future Arctic development. Even Shell acknowledges that it is helping to define what is “reasonable” for controlling pollution from drillships and other vessels in the region.

“If the EPA lets Shell proceed under the auspices of a permit it knows the company will violate, that sets a terrible precedent for going forward in the Arctic,” said Travis Nichols, with Greenpeace.

Environmentalists also say the recent developments are evidence of Shell’s “broken promises” when it comes to Arctic drilling.

“This is a disturbing theme of Shell promising that it’s going to do any number of things and then at the last minute essentially saying they can’t follow through,” said Kristen Miller, government affairs director for the Alaska Wilderness League.

Miller suggested Shell was trying to capitalize on momentum behind its drilling program, which is now closer than ever to beginning after seven years and nearly $5 billion in investments.

Although the Interior Department has approved Shell’s broad drilling blueprint for the Chukchi and Beaufort seas, the company must still win permits for individual wells in the area before it can launch the work. Officials with the Interior’s Bureau of Safety and Environmental Enforcement say those drilling permits are contingent on Shell proving that it can deploy a system for containing oil from a runaway subsea well.

The company’s containment system would be deployed from its Arctic Challenger barge, still in construction in a Bellingham, Wash. shipyard. Shell has not yet asked the Coast Guard for a certificate of inspection that would allow the barge to set sail and conduct the deployment test.