Kulluk drilling rig accident stokes fresh fears on Arctic drilling

The grounding of Shell’s Kulluk drilling rig amid a fierce storm in the Gulf of Alaska raised the specter of a fuel spill in the region and provided fresh fodder to drilling foes who insist Arctic oil exploration is too risky to allow.

The episode also cast doubt on whether Shell Oil Co. will be able to resume its hunt for Arctic oil this year.

The 29-year-old Kulluk conical drilling unit was unmanned when it plowed into rocks on the southeast side of Sitkalidak Island Monday night in Alaska, and there were no major injuries. But Coast Guard and Shell officials were still battling stormy seas Tuesday to assess the full extent of environmental damage and figure out a plan for recovering the stranded rig.

Although responders removed some fuel from the ship before an evacuation Saturday, about 143,000 gallons of ultra-low sulfur diesel and 12,000 gallons of lubrication oil and hydraulic fluid are estimated to remain on board the vessel, mostly locked in the center of the double-hulled rig.

Coast Guard surveillance flights showed no signs of a spill and revealed the Kulluk to be “upright, rocking with a slow motion,” said Shell Alaska Operations Manager Sean Churchfield.

It wasn’t clear whether the vessel can be salvaged or how it will weather the massive Gulf of Alaska storm that brought four-story seas and 70-mph winds to the area.

“The Kulluk is a pretty sturdy vessel. It just remains to be seen how long it is on the shoreline and how long the weather persists,” said Susan Childs, venture integrator for Shell Alaska. “We hope to ultimately recover the Kulluk with minimal or no damage to the environment.”

Coast Guard officials stressed that the first priority is responding to any spill and safely salvaging the Kulluk, but said an investigation will be conducted into the incident. Shell also pledged its own inquiry.

Responders said their main focus Wednesday will be getting experts on the Kulluk to assess its integrity and how it can be salvaged, after two attempts Tuesday were foiled by high winds and waves.

More than 500 people are involved in the effort, which Steve Russell of the Alaska Department of Environmental Conservation said was one of the largest marine response efforts off Alaska coast in recent memory.

Mehler repeatedly highlighted the turbulent environment during a brief news conference Tuesday afternoon, but said the response was guided by previous drills and planning for worst-case scenarios. And in the days before the Kulluk grounded, officials consulted Naval architects to plan for that outcome.

“We are operating in a marine environment in the winters of Alaska, which are extremely challenging conditions,” Mehler said. But, he noted, the rescue operation has been helped by the nearby Coast Guard station in Kodiak.

When problems began on Thursday, Shell was towing the Kulluk south to a Seattle shipyard for maintenance, roughly two months after using the drilling rig to bore the first half of an exploratory oil well in the Beaufort Sea north of Alaska.

The Shell-chartered Aiviq first lost its tow line to the rig and then its four engines malfunctioned. At least four subsequent bids to keep tow lines tethered to the Kulluk failed, most recently when the Aiviq separated from the vessel Monday night, leaving just one powerful tugboat, the Alert, linked to the rig.

At that point, grounding appeared inevitable so the Alert crew focused on steering the Kulluk to an area where it would have the least amount of environmental effects, the Coast Guard said.

The Alert and Aiviq had been taking advantage of an opening in the turbulent weather to try and pull the Kulluk to Port Hobron to ride out the storm.

The Kulluk now sits beached about .27 nautical miles from the northern shoreline of Ocean Bay in water depths of about 32 to 48 feet, near land owned by the Old Harbor Native Corp. The island itself is uninhabited, and the nearest town is Old Harbor, on the opposite side of Kodiak Island.

This is just the latest mishap in Shell’s $5 billion Arctic drilling program, and it is sure to spark new scrutiny of the company’s next steps as well as the dangers of searching for crude in the cold, forbidding region.

Shell is forging a new generation of Arctic drilling, and other companies with leases in the Chukchi and Beaufort seas are waiting in the wings.

Other high-profile mishaps included the drifting of Shell’s contracted drillship Noble Discoverer near Dutch Harbor, Alaska last summer. Later, Shell’s first-of-its-kind spill containment barge was damaged during certification tests. Finally, weeks after drilling was done for the year, a fire broke out on the Discoverer’s rig stack, and safety and pollution-control system deficiencies were discovered on the ship in November.

Mike LeVine, Pacific senior counsel with the conservation group Oceana, said the Kulluk’s grounding should be a wakeup call for regulators to reconsider allowing industrial drilling in the Arctic ocean.

“Shell has not been able to conduct any phase of its operations without substantial problems,” he said. “From construction of its response barge to complying with air and water protections to transit, Shell’s season has been plagued with problems, missteps, and near disasters.”

Other environmentalists said the incident raises questions about how Shell and federal regulators can ensure the safety of Arctic oil development if they can’t prevent an accident like this when drilling isn’t even occurring.

“In a demonstration of the power of Alaska’s fierce weather and seas, tugboats were unable to prevent Shell’s massive, $290 million Beaufort Sea drilling rig from grounding near Kodiak Island,” Epstein said. While it’s fortunate “there was no loss of life,” the incident proves that “Shell and its contractors are no match for Alaska’s weather and sea conditions, either during drilling operations or during transit.”

While the biggest natural foe for drilling in the Arctic Ocean is ice, high seas and winds are common in Pacific waters west of Alaska, particularly during winter months.

Shell’s Churchfield told reporters that the company had all necessary approvals before sending the Aiviq and Kulluk on their trek across the Gulf of Alaska on Dec. 21.

Shell officials also stressed that the incident didn’t involve drilling and emphasized that there no chance of a crude oil spill.

“We quickly mobilized experts to respond to this situation,” said Shell spokesman Curtis Smith. “And we can confidently say that the Shell emergency response assets and contingencies that were deployed over the last four days represent the best available in the world.”

Even if Shell can rescue the grounded rig, it is not clear it could be repaired in time for planned drilling this summer, or that Shell would be able to secure federal permits needed to resume the work. After buying the Kulluk for an undisclosed sum, Shell sunk some $300 million into renovations. It is unlikely that Shell could find a replacement, if needed, in time to launch drilling with it this summer.

Shell drilled the first half of two wells in the Beaufort and Chukchi seas last year and plans to finish them and others once ice clears this summer.

The U.S. Bureau of Safety and Environmental Enforcement, which vets offshore drilling applications, said in a statement that all equipment Shell plans to use “must first satisfy rigorous inspection and testing standards.”

“Any approved drilling activities will be held to the highest safety and environmental standards,” the agency said.

It is the Coast Guard’s responsibility to certify and inspect drilling units and other vessels. It also regulates the design, manning and navigation of those rigs in transit. The Coast Guard did not approve Shell’s decision to send the Kulluk and Aiviq southeast from Dutch Harbor.

Search and rescue missions are generally funded by taxpayer dollars, but this instance is being approached as if it were an oil spill under the Oil Pollution Act of 1990, where a “responsible party” pays for the operation. Mehler said Shell has “stepped up” to pay response costs.

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