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Rig accident shows danger of Arctic drilling: Green groups

The conical drilling unit Kulluk, owned by Royal Dutch/Shell, sits aground 40 miles (64 kms) southwest of Kodiak City, Alaska, on the shore
The conical drilling unit Kulluk, owned by Royal Dutch/Shell, sits aground 40 miles (64 kms) southwest of Kodiak City, Alaska, on the shore

By Ayesha Rascoe

WASHINGTON (Reuters) - Opponents of Royal Dutch Shell's ambitious Arctic oil program have called on the Obama administration to put offshore drilling plans in the region on hold after one of the company's oil rigs broke away from tow boats in high seas and ran aground off Alaska.

The Natural Resources Defense Council and The Wilderness Society on Thursday said the accident involving Shell's Kulluk oil rig is new evidence that oil companies are not prepared to safely manage the extreme conditions of the Arctic.

The 30-year-old Kulluk rig ran aground on New Year's Eve in what were described as "near hurricane" conditions while it was being towed south for the winter.

"This string of mishaps by Shell makes it crystal clear that we are not ready to drill in the Arctic," Chuck Clusen, NRDC's director of Alaska projects, told reporters in a teleconference.

The green groups said they plan to send a letter to the Department of the Interior demanding that it stop issuing permits in the Arctic and that it prevent drilling in the sensitive area until it is determined that the environment can be fully protected.

Ocean conservation group Oceana also called on the department to stop oil drilling activities in the Arctic after the Kulluk's grounding.

Shell has spent $4.5 billion since 2005 to develop the Arctic's vast oil reserves, but the company has faced intense opposition from environmentalists and native groups as well as regulatory and technical hurdles.

The company has yet to complete a single well and gave up on plans to explore for oil last year after its required oil spill containment system was damaged during tests.

Shell stressed the incident with Kulluk was a "marine transit issue" that did not involve actual drilling.

"It is possible to drill safely offshore Alaska, as our 2012 record shows," Shell spokeswoman Kelly op de Weegh said in a statement.

Shell was allowed to perform some preparatory drilling in the Arctic last year.

The company said it takes the Kulluk incident seriously and is participating in a probe of the incident with the Coast Guard and other companies involved.

Even without government action, the grounding of the Kulluk could threaten Shell's 2013 drilling timetable because its oil-spill plans require a second rig to be available at all times in case a relief well needs to be drilled to kill a well.

The Discoverer, owned by Noble Corp, is Shell's other Alaska rig. The Kulluk, while owned by Shell, is operated by Noble.

While Shell has made the most progress toward exploring offshore Alaska for oil, ConocoPhillips also has significant holdings in the Chukchi Sea.

ConocoPhillips paid more than $500 million in 2008 for leases in the area and has said it plans to drill an exploration well in the Chukchi in 2014 or later.

Massachusetts Congressman Edward Markey, the top Democrat on the House Natural Resources committee, also voiced concerns about Shell's fitness to operate in the Arctic.

"This is just the most recent incident in Shell's attempt to drill offshore in the Arctic and it raises serious questions about the company's ability to conduct these operations safely and in a way that protects the environment," Markey, an outspoken critic of oil and gas companies, said in a letter to Shell.

Markey asked the company to provide him with any plans it has developed to deal with severe weather in the region and for information about how the company plans to prevent similar accidents in the future.

(Reporting by Ayesha Rascoe; Editing by Maureen Bavdek and Jim Marshall)

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