Thursday, January 3, 2013

Grounding of Shell drilling platform highlights dangers of Arctic Oil Drilling

Shell has plans for drilling several exploratory wells in the Chukchi and Beaufort seas area off the north coast of Alaska. The grounding of the Kulluk circular oil drilling ship while being towed in heavy seas must call into question whether safety measures by Shell and Coast Guard response capabilities are adequate to allow Arctic drilling to proceed.

Initial approval for oil drilling by Shell Oil was given by the Obama administration in August 2012 despite opposition by numerous conservation groups and a petition of over a million US citizens. To preserve a safe climate based upon the simple climate maths of how much fossil fuels we can afford to burn, we need to Go Fossil Free through divestment, start taxing carbon and leave the oil reserves beneath the Arctic alone.

Related: Greenpeace - Save The Arctic | Sierra Club - Chill the Drills: Protect America's Arctic! | Center for Biological Diversity - Arctic Oil Development | Alaska Despatch - U.S.: Shell’s grounded drilling rig raises questions | July 2011 - Smears on integrity of Polar wildlife scientist a prelude to Arctic Oil Drilling

Coast Guard overflight of Kulluk aground

"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 at approximately 9 pm Alaska time on December 31, 2012. Fortunately, with extensive U.S. Coast Guard involvement, there was no loss of life." said Lois N. Epstein, P.E., engineer and Arctic Program Director for The Wilderness Society and member, DOI Ocean Energy Safety Advisory Committee

"The implications of this very troubling incident are clear – Shell and its contractors are no match for Alaska’s weather and sea conditions either during drilling operations or during transit. Shell’s costly drilling experiment in the Arctic Ocean needs to be stopped by the federal government or by Shell itself given the unacceptably high risks it poses to both humans and the environment." said Epstein.

Responding to the news that Shell's Arctic drilling rig Kulluk had run aground off Kodiak Island in Alaska, Greenpeace campaigner Ben Ayliffe said in a Greenpeace media release:

"The grounding of Shell's Arctic rig, which contains tens of thousands of gallons of fuel oil, is yet another example of how utterly incapable this company is of operating safely in one of the planet's most remote and extreme environments."

"Shell has lurched from one Arctic disaster to the next, displaying staggering ineptitude every step of the way. Were the pristine environment of the frozen north not at risk of an oil spill it would be almost comical. Instead it’s tragic. We're moving closer to a major catastrophe in the Arctic and the US government appears unwilling to provide either the needed oversight or emergency backup the company's incompetence requires."

Ayliffe added: "Rather than opening up the high north to oil firms we need to keep this fragile place off-limits to reckless industrialisation. Greenpeace and the millions of people who have joined us to save the Arctic will be keeping a very close eye on developments in Kodiak."

Other environmental groups have also criticised the expansion of Arctic drilling permits and operations. The approval for oil drilling by Shell by the Obama administration in August 2012 were criticised by the Centre for Biological Diversity as a monumental mistake.

"By opening the Arctic to offshore oil drilling, President Obama has made a monumental mistake that puts human life, wildlife and the environment in terrible danger. The harsh and frozen conditions of the Arctic make drilling risky, and an oil spill would be impossible to clean up," said Rebecca Noblin, Alaska director at the Center for Biological Diversity. "Scariest of all, the Obama administration is allowing Shell to go forward without even having the promised oil-spill containment equipment in place."

More than 1 million people sent President Obama messages asking him to save the Arctic from drilling. “Pursuing fossil fuels in the remote Arctic will destroy the life there, even as it speeds up the climate change that’s already destroying the polar bears’ home and poses enormous risks to people, too,” Noblin said.

On the grounding of the Kulluk the Centre said in a media release: “This latest mishap is another painful reminder that Arctic drilling is simply not safe,” said Deirdre McDonnell, a senior attorney at the Center for Biological Diversity said.

"It boggles the mind that the Obama administration approved Shell’s drilling plans for the Arctic Ocean when it’s so clear that harsh environment is just too dangerous for drilling. The storm that sent the Kulluk adrift isn’t unusual in Alaska. An oil spill in the Arctic would be devastating to wildlife and would risk human lives. It’s a recipe for disaster. I hope the president will come to his senses and save the Arctic from oil drilling," said McDonnell.

Read more at Ben Ayliffe's full blog on the Greenpeace website from January 2, 2013.

Greenpeace are running a campaign to make the Arctic a sanctuary, rather than opening up the high north to oil firms. They want to keep the fragile ecosystems of the Arctic off-limits to reckless industrialisation. You can join to help Save The Arctic! Alternatively visit the Arctic Oil Development campaign page for the Center for Biological Diversity for background information.

Shell risked moving drill ship in storm to avoid paying millions in taxes

It seems the Shell Oil Company decision to move the oil drilling platform ship, Kulluk, to Seattle was corporate greed to try and avoid paying Alaskan State taxes. If the rig was in Alaska on January 1st, about $6 millions of taxes would be due to the state of Alaska.

It shows that companies are not committed to the state where they may operate but move their assets globally, or from state to state to avoid taxes and fees. The company risked moving the drilling rig despite hurricane like Arctic storm conditions with high seas and high winds, putting at risk their asset and the lives of their workers.

A unified response command dealing with the Kulluk Tow Incident has been established , composed of the US Coast Guard, Shell Corporation, Alaska Department of Environmental Conservation, Noble Drilling Contractor, and Kodiak Island Borough.

Here is an excerpt from an article by Jim Paulin and Carey Restino dated Jan 03, 2013 from the Alaska Despatch: Shell hoped to save millions in taxes by moving now-grounded drill rig out of Alaska

A Shell spokesman last week confirmed an Unalaska elected official’s claim that the Dec. 21 departure of the Kulluk from Unalaska/Dutch Harbor involved taxation.

City councilor David Gregory said Shell would pay between $6 million and $7 million in state taxes if the Kulluk was still in Alaska on Jan. 1.

Shell’s Curtis Smith said in an email last week that the decision involved financial considerations. The rig had been moored in the Aleutian Islands port following several months on an oil exploration project in the Arctic

“We are now planning to sail both vessels to the west coast for seasonal maintenance and inspections. Having said that, it’s fair to say that the current tax structure related to vessels of the type influenced the timing of our departure,” Smith said. “It would have cost Shell multiple millions to keep the rigs here,” he added, though he didn’t have an exact amount.

Gregory said the departure of the Kulluk took money away from local small businesses servicing the rig. He predicted the maritime mishap will prove very costly to the oil company.

“It will cost them more than that $6 million in taxes. Maybe they should have just stayed here,” Gregory said.


Salvage operations begin on Shell's Arctic oil drilling rig Kulluk

The stranded Kulluk remains grounded, pounded by rough seas. Salvage teams have landed on the vessel and carried out an initial examination and assessment. There are worries that release of contaminants may foul the sensitive coastline which includes the Kodiak Wildlife Refuge containing two endangered species, and a cultural and archeologically significant site - Refuge rock. Greenpeace alledges Shell’s 2013 Arctic drilling program is 'on the brink' after a series of technical problems and failures with equipment this year.

There are approximately 143,000 gallons of diesel and 12,000 gallons of hydraulic oil on board the Kulluk, an aging drill rig built in 1983. Weighing almost 28,000 tonnes, the rig had been due for scrapping before Shell bought it in 2005 and the company has since spent $292 million to upgrade the vessel.

At a press conference on January 3 (transcript), Sean Churchfield, the Incident Commander and the Operations Manager for Shell Alaska outlined the results of that initial salvage assessment:

"Today, we can confirm that the Kulluk remains upright and stable and there is no evidence of sheen in the vicinity," he said.

"Yesterday's assessment by the five-person team on board the Kulluk provided valuable information that is being used for recovery planning. Findings include: some wave damage to the topsides of the vessel, but a number of water-tight hatches have been breached causing water damage inside and the team has secured some of the open hatches. And that the emergency and service generators have been damaged. An Emergency Towing System has been placed on the deck. Specialized salvage equipment has been ordered and is en route."

The Kulluk ran aground near the Kodiak Island National Wildlife Refuge, where any spill would have terrible impacts on local wildlife. The area is home to at least two endangered species, as well as harbor seals, salmon and sea lions.

After the 1989 Exxon Valdez disaster, the fear on everyones mind is of a substantial oil or diesel leak. To allay those fears Churchfield stated in the press conference, "Oil spill response equipment continues to be deployed as a contingency. Staging areas are being established in Seward, Kodiak and Old Harbor. Vessel-based response equipment is on scene with additional assets en route."

Any leak will be difficult to contain in heavy seas. Current sea conditions are showing a 10-12 foot swell with winds of 35 knots. Conditions may worsen over the weekend.

Shell Alaska (@Shell_Alaska) Vice President Pete Slaiby has since tweeted "We are encouraged at what we are seeing of the integrity of the hull." (tweet) and "There was damage done to the electrical system on board, but by far the structure looks good." (tweet)

The recovery operation already involves over 600 people, with the US Coast Guard has initiated an investigation of the incident and is flying in investigators from the Coast Guard’s Center of Excellence in New Orleans to conduct the Coast Guard Marine Casualty Investigation. Captain Paul Mehler, the Coast Guard Federal On Scene Coordinator, has committed the results of the investigation being made public.

At the press conference it was revealed that the Kulluk is grounded near a culturally significant site: about a mile from Refuge Rock. Duane Dvorak from the Kodiak communities outlined the significance to Native landowners and the people at Old Harbour, the closest community:

"That is probably the most culturally significant place for the Old Harbor community. ...there was a massacre of Old Harbor Natives when the Russian colonization of Kodiak had occurred. I don't know all of the historical significance — or excuse me, all the details, but that was a place where they typically would seek refuge when they were at conflict with other Native communities but with the firearms of the Russian/American company to deal with, it was an unfair situation but it is something that's been passed down to (inaudible) traditional for many generations. Only in the past 10 years has archeological evidence been found to validate the exact location of this place and to document that."

Shell's Arctic Oil drilling program incompetent: Greenpeace

Greenpeace have responded saying the grounding of the Kulluk demonstrates Shell's ongoing incompetence in Arctic Oil drilling Operations.

Greenpeace USA Deputy Campaigns Director Dan Howells said in a statement:

"The rocks grinding against the Kulluk’s hull are damaging Shell’s corporate reputation just as badly as the rig itself. It’s hard to see how this company can salvage this rig, repair it and regain the public’s trust in time for the 2013 drilling season.

"Shell's US$4.5 billion Arctic gamble is looking like a serious mistake, and should act as a warning to other companies looking to drill in this incredibly hostile environment.

"The US administration should stop licensing Arctic drilling and start protecting America’s coastline from Shell’s incompetence. Oil companies cannot operate safely in the pristine Arctic, where both the risks and the impacts of any industrial accident are too great to bear."

"Shell cannot be allowed to continue its reckless drilling programme. Over two million people have already joined a campaign to protect the Arctic from destructive industry and Shell's latest mishap confirms their worst fears. The US government must finally stand up and take action,"

It has already been revealed that Shell was moving the drilling rig from Alaska to Seattle, Washington to avoid about $6 million in property taxes that would be due on January 1st.

The Greenpeace statement documented several incidents this year in Shell's Arctic drilling program. These include:

  • In July: Shell admits that it can’t meet US government air pollution targets for its Arctic drilling fleet, and asks for an exemption. (La Times story)
  • Also in July, Shell’s other drilling vessel Noble Discoverer slips anchor and runs aground in Dutch Harbor, Alaska. (CNN story)
  • In August: the Arctic Challenger, a barge built by Shell to contain oil spilled during any accidents in the Arctic, is cited by Federal authorities for four illegal discharges of hydraulic fluid during preparation work for the summer drilling season. (LA Times Story)
  • In November the Noble Discoverer engine catches fire in the port of Dutch Harbour, Alaska (Alaska Despatch story)
  • In early December FOIAs reveal that Shell’s sub-sea capping stack was “crushed like a beer can” during testing. (KUOW.org story)

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