Shell Alaska scales back Arctic drilling until next year

Sep 18, 2012 by Kim Murphy

Shell Alaska has abandoned efforts to drill into hydrocarbon deposits in the offshore Arctic after the latest glitch on its troubled oil containment barge damaged the high-tech dome designed to contain any underwater oil spill, the company said Monday.

Company officials said they would continue to drill "top holes" off the Alaska coast through the end of this season's drilling window, but would not attempt to reach any this year - a serious but not fatal setback for Shell, which has spent six years attempting to explore its leases on the outer continental shelf.

"This critical program ... could be an important national resource for the next several decades, and we are committed to doing it safely and responsibly," Shell spokeswoman Kelly op de Weegh said in a statement. "We're not going to rush things for the sake of a few days this season."

The latest setback involves the oil containment barge Arctic Challenger, which has been delayed in Bellingham, Wash., undergoing a trouble-plagued retrofit.

For weeks, the vessel has been unable to win U.S. Coast Guard certification after problems with some onboard , among other things. The Coast Guard documented four minor illegal fluid discharges from the barge while it was moored in Bellingham.

have not allowed Shell to plumb into hydrocarbon deposits until the vessel is on site in the Arctic, but the multimillion-dollar upgrade has been delayed by one problem after another.

The refurbishment was completed last week and the vessel underwent in Puget Sound. A series of tests was successfully completed on the newly designed Arctic , op de Weegh said.

"However, during a final test, the containment aboard the Arctic Challenger barge was damaged," she said.

Sources familiar with the testing said the mishap occurred when one of several clump weights was placed into about 160 feet of water to mark the area of a theoretical oil spill to see whether the barge's containment dome could be lowered over it.

"When they came back to find it, it (the weight) was lost, submerged into the silt," said one source, who spoke on the condition of anonymity because he was not authorized to discuss the operation.

Engineers launched a mini-submarine known as a Remotely Operated Vehicle, which is part of Shell's plan for putting any oil spill containment equipment into place, to help get the containment dome set over the "leak."

"They got some of the weights set to hold the dome, then one of the eight winches on the dome became inoperative," the source said. "They attempted to discover what was wrong by using the ROV, and got it tangled in the anchor lines of the dome and it sank into the silt."

Divers were dispatched to the sea floor to try to recover the dome without damaging the umbilical that controls it, he said.

It was not clear how much damage the dome suffered, but it apparently was enough to prompt Shell to abandon its well-drilling plans for the season.

spokesman Lt. Paul Rhynard acknowledged in an email to the Los Angeles Times that there were "ROV issues" during the testing but said they had no bearing on the agency's certification of the vessel.

Shell officials said they could drill top holes on some wells so that operations could start quickly in the summer of 2013.

"We will begin as many wells ... as time remaining in this season allows," op de Weegh said. "The top portion of the wells drilled in the days and weeks ahead will be safely capped this year, in accordance with regulatory requirements."

Shell had started drilling an initial well in the Chukchi Sea earlier this month but had to stop and move away when a large ice floe approached. Company officials hope they can reposition the rig and resume drilling in the next day or two.

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