Last year, Shell attempted a long-planned exploratory drilling program offshore Alaska inthe Beaufort and Chukchi Seas. Shell’s goal for the summer drilling season was to confirm amajor discovery of oil in commercially-viable quantities in the Alaskan Arctic Ocean.Shell was not able to achieve its goal and did not complete any exploration wells lastsummer. The company experienced major problems with its 2012 program, some of which have been well-publicized. Shell’s difficulties have raised serious questions regarding its ability tooperate safely and responsibly in the challenging and unpredictable conditions offshore Alaska.As a result, Secretary of the Interior Ken Salazar ordered this review of Shell’s 2012 Alaskaoffshore drilling program in the Beaufort and Chukchi Seas. The purpose of this review is toassess, at a high level, Shell’s performance across all aspects of its 2012 Alaska offshoreexploration program, identify key lessons to be learned from Shell’s experience, and makerecommendations applicable to any future exploration drilling operations that may be proposedfor the Arctic Outer Continental Shelf (OCS). The Secretary directed that this report and itsaccompanying findings and recommendations be completed within 60 days.
This review has confirmed that Shell entered the drilling season not fully prepared interms of fabricating and testing certain critical systems and establishing the scope of itsoperational plans. The lack of adequate preparation put pressure on Shell’s overall operationsand timelines at the end of the drilling season. Indeed, because Shell was unable to get certifiedand then deploy its specialized Arctic Containment System (ACS) – which the Department of theInterior (DOI) required to be on site in the event of a loss of well control – the company was notallowed to drill into hydrocarbon-bearing zones. Shell’s failure to deploy the ACS system wasdue, in turn, to shortcomings in Shell’s management and oversight of key contractors. Likewise,additional problems encountered by Shell – including significant violations identified duringUnited States Coast Guard’s (USCG) inspection of the
drilling rig in Sewardlast November, the lost tow and grounding of the
rig near Kodiak Island in lateDecember, and violations of air emission permits issued by the Environmental ProtectionAgency (EPA) – also indicate serious deficiencies in Shell’s management of contractors, as wellas its oversight and execution of operations in the extreme and unpredictable conditions offshoreof Alaska.Although Shell’s difficulties prevented the company from fully executing its drilling plans last summer, the company successfully completed some important elements of its drilling program. In particular, Shell succeeded in drilling “top hole” sections of two wells in the ArcticOcean, and it did so safely without any significant injuries to workers or spills. Shell employedweather forecasting and ice management systems that enabled it to respond effectively tochanging sea ice conditions, including the encroachment of a major ice floe on Shell’s Burger Awell site in the Chukchi Sea. Shell also coordinated well with Alaska Native communities andsubsistence hunters, even under circumstances that delayed its drilling program in the BeaufortSea.
Department of the Interior, “Secretary Salazar Launches Expedited Assessment of 2012 ArcticOperations,” January 8, 2013.http://www.doi.gov/news/pressreleases/secretary-salazar-launches-expedited-assessment-of-2012-arctic-operations.cfm