Shell’s Plans For Arctic Drilling May Be On Ice After Latest Rig Disaster

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    In this image provided by the U.S. Coast Guard the conical drilling unit Kulluk sits grounded near a beach 40 miles southwest of Kodiak City, Alaska, Thursday, Jan. 3, 2012. (AP Photo/U.S. Coast Guard, Petty Officer 2nd Class Zachary Painter)

    In this image provided by the U.S. Coast Guard the conical drilling unit Kulluk sits grounded near a beach 40 miles southwest of Kodiak City, Alaska, Thursday, Jan. 3, 2012. (AP Photo/U.S. Coast Guard, Petty Officer 2nd Class Zachary Painter)


    (NEW YORK) MintPress – Oil giant Shell started off the new year with a bang — albeit not a welcome one.

    Late on Dec. 31, its Kulluk drilling rig crashed into the uninhabited Sitkalidak Island in the Gulf of Alaska after stormy weather caused it to pry loose from tug boats that had been pulling it to Seattle for the winter.

    The Kulluk had been drilling exploratory wells in the Arctic National Wildlife Refuge as part of Shell’s nearly $5 billion bid to resuscitate offshore oil production in its waters.

    After being grounded for a week, on Jan. 6 the vessel was brought afloat. When officials are satisfied it is seaworthy, it will be towed 30 miles to shelter in Kodiak Island‘s Kiliuda Bay, where damage will be more fully assessed.

    Shell said in a press release on Monday that the Kulluk is in stable condition, with no initial evidence  that any of the 150,000 gallons of diesel and lubricants it carries leaked. But water entering parts of the rig has caused damage, including to its generators.

    According to Fuel Fix, “Salvage crews on the Kulluk have discovered wave and water damage inside the rig, along with inoperable emergency generators. A number of watertight doors were breached. One compartment, or void, surrounding the rig’s inner hull also was damaged.”

    More than 730 people, a dozen ships and a handful of helicopters were involved in the operation. The Coast Guard Cutter Alex Haley and two oil spill response vessels are on standby, and boom, an absorbent material used in oil cleanup efforts, was deployed around Kodiak Island to ensure any spilled fuel wouldn’t reach nearby salmon fisheries.

    Depending on how long it takes to repair or replace the Kulluk, Shell may not have the necessary number of rigs ready to meet its U.S. permit requirements by the beginning of the summer Arctic drilling season.

     

    Arctic drilling controversy

    That would be just fine with environmental groups, who have warned that the extreme weather in the area makes equipment problems and hazardous fuel leaks more likely to occur. The region’s relative remoteness also means that cleanup efforts can take longer to coordinate.

    “The latest incident is one in a long line of mishaps in trying to start the Arctic drilling program and shows the idea is not feasible,” Greenpeace spokesman Travis Nichols tells MintPress News. “There’s no way to do it safely. There’s no way in which you don’t put the delicate ecosystem at risk.

    “They’re doing heavy industrial activity with no adequate response plan, so the potential for a Deepwater Horizon type disaster is very high,” he continues.

    “The bigger risk is exploiting global warming to drill for oil, which causes global warming. It’s insanity. If they burn the oil that they have the potential to find in the Arctic then it’s game over for the planet.”

    Indeed, it is only in the last few decades that the once impenetrable ice laying over the Arctic’s vast oil resources has been melting, creating the ongoing debate in Washington and the media over whether to drill for oil in the area.

    Weighed against the potential harm oil exploration might have upon the environment is the amount of economically recoverable oil.

    The United States Department of Energy estimates that Arctic oil production between 2018 and 2030 would reduce the cumulative net expenditures on imported crude oil and liquid fuels by as much as an  $327 billion, reducing the foreign trade deficit.

    President George W. Bush was a staunch supporter of drilling in the Arctic, contending that it could “keep America’s economy growing by creating jobs and ensuring that businesses can expand and it will make America less dependent on foreign sources of energy.”

    It was during the Bush administration that Shell won its Arctic leases. In August 2012, the Interior Department granted Shell permission to begin preparatory work on its first well in the area. The announcement came just as the Republican National Convention, where speakers criticized President Obama’s energy policies as too restrictive, was winding down. The administration said the timing was a coincidence.

     

    Oil, water and taxes

    Adding insult to the Kulluk injury are reports that Shell moved the rig on Dec. 21 to avoid paying a hefty tax bill.

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

    That’s because of the state’s oil and gas property tax, which is levied on all assets dedicated to oil and gas exploration, transportation and production in Alaska. The tax comes to 2 percent of the assessed value of the property.

    Shell has provided mixed answers on whether taxes were a determining factor in leaving when it did. In an email to the Dutch Harbor Fisherman, spokesman Curtis Smith said “it’s fair to say the current tax structure related to vessels of this type influenced the timing of our departure.

    “It would have cost Shell multiple millions to keep the rigs here,” he added, though he didn’t have an exact amount.

    A few days later, at a New Year’s Day press conference, when asked if taxes influenced departure, Sean Churchfield, incident commander and operations manager for Shell Alaska, said they had not.

    “The reason we moved it down (to the Seattle-area) was to get off-season repairs done,” he said. “We moved once we had the rig ready to tow, prepared and inspected, it was only moved down to give us maximum time to prepare for the 2013 season.”

    Gregory, the councilman, said the departure of the Kulluk took money away from local small businesses servicing the rig.

    The revelation also further damaged the company’s reputation.

    “If it’s going to cut corners to dodge a tax bill before Jan. 1,  then how can they be trusted to do safe work in the actual Arctic,” says Greenpeace’s Nichols.

     

    Spoofing Shell

    Meanwhile, Greenpeace is still enjoying the popular success of an elaborate hoax it engineered in June, along with The Yes Lab, aimed at increasing awareness of Shell’s plan in the Arctic through a fake Shell website.

    The groups, with the Arctic Ready site and accompanying “Let’s Go!” campaign, have employed social media, online video and gaming in a major assault on the company.

    In a post after the Kulluk disaster, they wrote, “Yes, the reports are true. Our 266-ft drilling barge containing over 140,000 gallons of diesel fuel has run aground in a highly sensitive ecosystem off the coast of southern Alaska. But what is failure but a bump on the road to triumph?

    “In fact, we consider this an auspicious beginning to our 2013 Arctic adventure. Contrary to the numerous warnings by scientists, environmental activists, and people indigenous to the region, we take this recent occurrence as a sign that Shell is in the right place, doing the right thing. Nature has spoken, and it’s asking the Kulluk to stay a while longer,” the piece continued.

    It ended by saying, “On the slight chance that something does go wrong, Shell’s spill cleanup plan is second to none. No one has yet fully determined how to clean up an oil spill in pack ice or broken ice—but that too is exactly the sort of challenge we love.”

    Let’s Go!

    Viewers are also invited to add their own posts.

    Nichols says that at last count, the website has had close to 4 million page views. “People continue to enjoy telling Shell what they think about Arctic drilling, that they think this whole plan is insane”


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