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Interior’s Review Says Shell was Unprepared for Arctic Drilling

Interior’s Review Says Shell was Unprepared for Arctic Drilling

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Source: James Brooks

Source: James Brooks

On March 8, 2013 the Department of Interior finished its 60 day review of Royal Dutch Shell’s 2012 drilling season in the Arctic. Shell’s 2012 campaign suffered multiple setbacks causing the oil company to announce on February 27th that they will be taking a year off from drilling in the Arctic. However, Shell still has ambitious plans for drilling in the Chukchi Sea and the Beaufort Seas off the coast of Alaska.

According to the Department’s review, Royal Dutch Shell entered the drilling season “not fully prepared” and as a result, experienced multiple problems. The review went on to say that before Interior will allow Shell to resume drilling, Shell must make a series of “affirmative showings.” Ultimately, the Department of Interior still believes the oil company can be successful in the Arctic. However, Shell must implement several recommendations in order to resume drilling in 2014.

First, Shell must submit a new integrated plan that fully details their drilling operations. This includes providing a more detailed explanation of their operations, how they intend to carry out their plans, along with a complete timeline of their plans. They also want a full list of contractors the company plans on working with.

Along with a new fully detailed plan, the department also wants Shell to conduct a third party audit to make sure that all management systems are tailored for the harsh conditions of the Arctic. Interior Secretary Ken Salazar has stated that the Obama administration will be committed to Arctic energy development and ensuring that Royal Dutch Shell operates safely in the Arctic.

Shell’s 2012 campaign was riddled with setbacks. In July 2012, one of Shell’s drilling rigs “The Noble Discoverer” drifted out of control. In September, their oil spill containment system was completely crushed and in October “The Noble Discoverer” caught fire. Shell’s misfortunes cumulated in December when its other drilling rig, the “Kulluk,” ran aground when Shell was attempting to move it.

Despite these difficulties, the Arctic holds significant energy resources. It is estimated that 29 billion barrels of oil are located with the U.S. controlled areas of the Arctic.

Along with the Department of Interior’s 60 day review, the Coast Guard has also found 16 safety and environmental violations on “The Noble Discover” drilling rig alone. They are also reviewing “The Kulluk”, investigating whether or not there were levels of misconduct or negligence.

The recommendations listed by Interior’s report will require additional steps for Shell before it can resume its drilling campaign. Ultimately, however, Interior believes Shell is capable of fixing its errors, allowing drilling to resume in 2014.

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