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Shell screwed up in 2012 says US Interior Secretary Ken Salazar

Mar 15th, 2013 

by John Donovan.

"Shell screwed up in 2012, and we are not going to let them screw up after their pause is over," Interior Secretary Ken Salazar told reporters today on a conference call.

Arctic-Specific Rules Required After Shell's 2012 Mishaps

By Mark Drajem – Mar 14, 2013 9:45 PM GMT

Royal Dutch Shell Plc will need to win approval of a full operating plan before it resumes drilling off the coast of Alaska, following a series of mishaps in its 2012 operations, the U.S. Interior Department said.

An Interior review of Shell's exploration in the Arctic found shortcomings in oversight of various contractors and said the company started work "not fully prepared." The company announced a pause in its plans last month.

"Shell screwed up in 2012, and we are not going to let them screw up after their pause is over," Interior Secretary Ken Salazar told reporters today on a conference call. Salazar ordered a staff review of Shell's experience in January, and he released its findings today.

"Before Shell is allowed to move forward, they are going to have to demonstrate to us that they have a comprehensive management plan in place," he said.

Shell will "apply lessons learned" from the Interior report along with a separate Coast Guard investigation and its own assessment to bolster its offshore program, said Curtis Smith, a company spokesman in Alaska.

"Alaska remains a high potential area over the long-term, and we remain committed to drilling there safely, again," Smith said.

Arctic Weather

Two ships Shell was using in the Beaufort and Chukchi seas were being towed to Asia for repairs, meaning it will miss any chance to resume drilling in 2013, the company has said. The company never got a U.S. permit last year to tap an oil reservoir off Alaska's north coast because of issues with a spill-containment system. Shell also encountered weather delays and was cited for violating air-pollution standards.

Oil exploration and production companies have stepped up plans for drilling in the Arctic in the past five years, using technology that may let them reach oil reserves trapped in the sea floor beneath ice. The Chukchi and Beaufort seas may contain 25 billion barrels of oil, according to the U.S. Geological Survey.

Shell, the only company working off the Alaska coast, drilled two preparatory wells last year after spending about $4.9 billion over seven years preparing for Arctic exploration.

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Jon Morgan atjmorgan97@bloomberg.net

SOURCE

Posted in: Alaska, Arctic, Bloomberg, Corporate Governance, Environment, Oil, Royal Dutch Shell Plc, United States.
Tagged: Alaska · Arctic Ocean · Beaufort Sea · Chukchi Sea · Royal Dutch Shell Plc

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