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Sara Francis / U.S. Coast Guard via AP, file
An aerial image provided by the U.S. Coast Guard shows the Royal Dutch Shell drilling rig Kulluk aground off a small island near Kodiak Island on Jan. 1. Shell announced Wednesday that it had put off further drilling in Alaska's Arctic Ocean for the year.
ANCHORAGE, Alaska -- Royal Dutch Shell will not drill for oil in Alaska's Arctic seas this year, the company said Wednesday in a widely expected decision that follows a series of high-profile setbacks in 2012.
Both critics and supporters of Shell's controversial Arctic offshore foray welcomed its decision to give up on drilling there for 2013 while the company tries to get its drill ships ready and answers to U.S. investigators.
Michael LeVine, senior Pacific counsel for environmental group Oceana in Juneau, Alaska, said Shell and the government agencies regulating the company faced a "crisis of confidence."
"The decisions to allow Shell to operate in the Arctic Ocean clearly were premature," LeVine said in a statement. "The company is not prepared and has absolutely no one but itself to blame for its failures."
Few observers doubted that a postponement of Shell's drilling in the Chukchi and Beaufort seas was coming after the company said earlier this month its two Arctic offshore rigs would head to Asia for repairs and upgrades.
But ConocoPhillips reaffirmed on Wednesday that it will continue with its own plans to drill one or two exploration wells in the Chukchi Sea in 2014 and that it expected to submit more information on the plans to federal regulator by the end of March.
Analysts say the Arctic's allure for oil drillers remains strong given the complications of politics and violence they face in other parts of the world.
Shell has spent more than $4.5 billion searching for oil in Alaska's Arctic seas since it won licenses to drill in 2005. Yet its season last year was delayed by problems with equipment, and 2012 ended dramatically with the grounding of the Kulluk drill ship in a storm as it was being towed south for the winter.
"Our decision to pause in 2013 will give us time to ensure the readiness of all our equipment and people," said Marvin Odum, director of Shell Upstream Americas.
David Yarnold, of environmental group Audubon, said Shell had "come to its senses," since drilling amid ice floes near the nurseries of threatened wildlife was not "smart or safe."
The Anglo-Dutch company's move into Alaska's Arctic waters -- the first since the Macondo disaster of 2010 -- was expected to face criticism, but technical problems with its rigs led to even deeper concerns.
'A disappointment'
U.S. Sen. Lisa Murkowski, R-Alaska, said in a statement that she was a strong supporter of Shell's activities off her state's northern coast if they meet the "highest safety standards."
"This pause -- and it is only a pause in a multiyear drilling program that will ultimately provide great benefits both to the state of Alaska and the nation as a whole -- is necessary for Shell to repair its ships and make the necessary updates to its exploration plans," she said.
Alaska Gov. Sean Parnell, also a Republican, said in a statement: "While Shell's decision to pause drilling in Alaska is a disappointment, I commend the company's commitment to safety and responsible development."
"Much progress has been made toward developing the vast resources in Alaska's Outer Continental Shelf, and we recognize this is a long-term endeavor," the governor added. "Taking the long view, we are at the early stage of a new era of oil exploration in the Arctic, one that will continue for decades in a measured and responsible way."
Even before the Kulluk ran aground on Dec. 31 after escaping its tow lines, Shell's 2012 drilling program was stalled by troubles with support vessels and regulatory scrutiny of the other rig, the Noble Discoverer, owned by Noble Corp.
After the Arctic drilling season closed at the end of October, a fire broke out on the Discoverer. There were also engine failures on the Aiviq, the specially designed ship pulling the Kulluk, before it lost its tow connection.
Related:
Drilling in Arctic too risky, oil CEO says
Shell sues environmental groups to score drilling rights
Copyright 2013 Thomson Reuters. Click for restrictions.
Leave a Comment:
To be expected. They do not want to be the next BP and are cutting their losses after two major events that cast doubts on their safety record.
Not being ready will not deter BP. In fact their emergency reaction plan as they submitted their documents include protecting the tropical corals and Pelican nesting areas of Alaska ! The gubmint employees accepted their documents and stamped "approved" on them.
Even Shell admits they are not capable of safe arctic drilling. Perfect.
NO, that's only what YOU say; in reality Shell only states they are are still PREPARING their equipment and are not ready yet. You make it sound like incompetence, the true story sounds like they are doing their due diligence. This is the difference between an objective read and one with a slant (yours).
BS.
If they were in a "state of preparation" as you assert, then why were they up there risking environment and equipment and manpower?
They stated they were ready in order to get the government clearance and then failed to perform and managed to rack up scores of safety infractions even while in port in one rig's case.
You work for the industry or something? I ask because you sound like a total apologist who is more into slanting things than I am.
Keep in mind this is an oil company. One rig came loose from an anchor and floated to shore, and we are supposed to believe it couldn't get a tow or drop another anchor while drifting for days before making it to shore? The other rig had dozens of safety violations when the coast guard inspected it. Both events have been publicized and Shell has admitted mistakes were made. I believe both incidents were done by Shell on purpose. Why? So they can say current pricing was dependent on being able to get oil from the Arctic, but now that they can't do that they have to raise prices. Just like this year half the California refineries shut down due to low demand for oil, and one month later prices were raised due to high demand and low supply. Last year half the refineries shut down for "upgrades" and prices were raised then too. The oil companies already have huge stores of oil and they create failures on purpose to raise prices on those stores, they've been doing it for decades.
Gov.Parnell is a religious zealot hellbent on extracting every resource in Alaska before Jesus comes back (ostensibly riding a T-Rex). But I could be mistaken.
go crawl back under your rock scumball,another fool thinking their smarter than god,idiot!!!
Even god would not mix up their with they're.
"But I could be mistaken."
Best part of your post.
Likely outcome will be the Tyranus Rex returns to reclaim his throne.
Too bad. The world needed that oil. And our government was smacking their lips at the thought of looting another oil company.
WOW 4.5 billion used in searching for oil. That could have been spent in research to get away from oil ~ Anyone see the ISU solar car? Next step: stop the Keystone pipeline...
How about we just ban oil from our everyday life. Wouldn't that be better?
I may be the slightest bit supportive of these oil companies if they had any plans to increase refinery capacities, or even sell the oil that they take from under us back to us at less than market value in exchange for their subsidies. But they don't, so I'm not.
Chris, can you spell out what subsidies they get?
As for refineries, do you think the environmental lobby in ths country has anything to do with the lack of new ones being built?
http://money.cnn.com/2011/04/26/news/economy/oil_tax_breaks_obama/
No. Lack of refineries are simply the economic route major oil companies use to maintain a false scarcity and thereby boost refined product prices. It's not in the bottom line interest of the companies to build more refineries.
Bookem Danno
The oil & gas industry adds 465 BILLION to the US economy every single year, its like the government spending 60% of stimulus package yearly to prop up the economy, and this is done from the private sector. It also supports nearly 9.2 million jobs nationwide. This is the reason why every government supports the oil & gas industry, without it things would be much much worse.
I believe you won't be happy until we are living back in caves. Not all of us are trust fund babies or live in our parents basements, we have to make livings. Unfortuantely, 80% of oil reserves are under the soil of unfriendly nations. We are this close to being energy independent. I support green technology but there is not a silver bullet. You are every bit as extreme in your views as Sarah Palin is in hers. You are the democratic tea party. Unfortunately, you stupid fools will be responsible for Mitch McConnel being the Majority Leader after the next election. Between gun control and keystone there will not be an incumbent democrat from a red state that will be re-elected. Then it will be "drill baby drill"
This is what we get from greed! I hope like hell nothing bad happens!!! I would hate to see that beautiful coastline filled with oil!!! I'm not sure how we proffit from this oil? It will be sold on the market, and we all know where that is!!!
Look, Shells not stupid, they already spent 4.5 billion, 4.5 billion is a chunk of change. The equipment is an excuse. There is something else for this type of calendar swipe off for the 2013 year. Seismic activity has been very high and more ice is moving making it way to risky for mother nature to deal a devastating blow which may topple the BP and the historic Valdez accidents. An earthquake!
Run for your tinfoil hats everyone.....
stay the hell out of the oceans,hav.nt you learned your lesson with all the oil spills,they don,t give a damn,our children will be left with oil to swim in,don,t nobody give a damn about anything anymore except greed!!!
????? Only oil to swim in???? Do you not have TV or internet? I see no one swimming in oil in the gulf these days, and fishing is strong even where the Valdez leaked 20 years ago; Do you realize how stupid you sound?
Expect to see a lot of these diversionary articles in the near future, also "speculators", crude, a couple of refinery problems, etc. Anything but the fact that devaluing the dollar is causing the gas prices to soar, yet the sheep will bleat...er ...believe..
Yes IA ScooterTramp, why haven't you been yelling "drill baby drill" like you did several years ago? Or did the BP accident in the gulf make you realize that the oil companies have been lying about how safe their deep water drilling is?
And yes, refinery problems, speculators, devaluing the dollar (when did that happen) will all cause the gas prices to soar. Yet the GOP had complete control of the govt from 2001 thru 2006, and never solved the problem either.
If we are paying subsidies to the oil companies, I would expect them to provide us a discount on gasoline. They will not. They are taking the new oil that is being handed over to them, and selling it on the open market for profit. Then they are purchasing oil from other countries and bringing it back into the US. That's why gas prices are as high as they are. Why are we not building diverse refineries, instead of shipping unprocessed oil around our country? Oh yeah, they lose their lever to jack up prices for no good reason. Sure, the dollar value does not help, but it is better than it was in 2007 by my count.
Get a grip sally...every time you raise the debt ceiling you devalue the dollar take a 7th grade economics course. as for when whats are credit rating now? historic lows due to the same. and who is the ONLY u.s. president to oversee its fall?....yep.....And "speculators"? just what in the world do you think the stock market is or does?
Chris
Profit for oil company's for producing product.....08 gal.
fed tax ....18.4 and rising
state tax 15. and up depending on state ....and rising..
Everything you purchase is tied to gas one way or the other, Or do you two think everything in the store just magicvly appears?..under bush it rose to over 3 bucks in 05 and 08 both for a few months and the people were screaming. it has risen to over 3 bucks a gallon two months after Barry took office and stayed there. yet the sheeple still bleat his "accomplishments" ...do some research besides the lib logic 101 handbook.
Don't know why i bother ...."You can lead a lib to facts.. but you cant make him think".
would have liked to see Shell's 4.5 billion oil exploration money spent exploring alternative fuels...
That's already been done. There are none.
Untrue Rex. Between Solar, wind, and geothermal, we can reduce our use of fossil fuels tremendously. But big oil is still making money. Why do they want us to slow down??
If there was money to be made in alternative energy, companies would be flocking to produce them. Fossil fuels produce the most economical, efficient form of fuel. That is why they are used.
BS. The oil and coal companies actively lobby against any development of alternative industries they aren't in control of. Money talks and the oil companies are the largest producers of revenues on the planet. If you add in the costs of environmental damage caused by overuse of carbon products and all the subsidies granted to them in land leasing, tax breaks and so-on the actual cost of oil is far and away greater than the alternatives.
Shell resembled the gang that couldn't shoot straight as regards Alaska. So rushed to produce for shareholder reports that they had drilled in Alaska, they never were able to get their act together. A series of mistakes that mounted. Even rushing to move the drilling equipment out of Alaska waters before an Alaska tax hit them was folly, and costly. But heck, what is a few billion to an oil company? Pocket change. Just write it off their taxes.
These companies need more over sight. It is clear they aren't ready and yet there they where. I'd really like to see what new methods and technolegies they have come up with since the Gulf oil spill that would stop it from happening now if the same things took place. We know you know how to drill the question is do you know how to stop a leak at the bottom of the ocean yet? If no then you aren't ready.
Hopefully the oil companies did learn from the BP accident in the gulf. We haven't yet to this day, really realized the damage that oil spill did. Not only to the fish, but also to the balance of nature in the gulf area. And yes, remember when the GOP/baggers were crying "drill baby drill"? And blaming Obama for not doing this or that with the permits, and the cleanup of BP's mess?
Well, they can't blame Obama for this pull out, but they will try. What Alaskan tax are they talking about, a Red state wouldn't tax an oil company, would they? Gee, that goes against everything the GOP stands for.
Sally Ann -
All states tax oil and gas production. It is not a "new" thing. What Alaska does and has done is place the royalties into a trust fund. Each year or so each citizen of Alaska get a "rebate" check from interest earned on those royalties. Alaska has a very large cash reserve.
Interesting how they can have loads of cash in the bank while other states are broke. Alaskans can thank Sarah Palin for suing the oil and gas companies for not paying the proper amount of royalties as they were suppose to. I am sure a person such as yourself could care less that she stood for the the people of her state instead of the big bad evil oil and gas companies.
Let me tell you everything you day every day in your life is because of the oil and gas industry. The clothes on your back would not be possible, the car your drive. the heat in your home, the AC when its hot. The beverages you drink, the medicine you need are all because of a vibrant oil and gas industry.
Andrew -
The technology for deep water drilling is fine. What failed in the BP incident was the human element not the technology. When you change the cement plug formula to save money and circumvent the secondary system on the sub-sea BOP for use as as underwater camera and cut the mud weight required while drilling. Those three elements equals disaster. BP is squarely at fault. The technology works that is not the problem the problem was those individuals responsible for over-site on the project. From the project managers to the government regulators all failed and should all be held responsible. You notice not one government wonk that approved and supervised the site has been brought to account. Why is that? They are to approve and sign off on all aspects of drilling and production for all offshore activity.
With exploration and oil comes money for research and development. We will not see alternative energy in our life time so get over it. Oil is way to much of the worlds economic structure to be replaced anytime soon. We do the best we can with what we have!
Silly humans. Still transporting themselves around in 19th century technology-internal combustion engine.
From what I have been told by people that work in that environment in the oil patch the drill ships that are being used and the semi-submersible rig were having stability issues. You would think Shell would have that figured out (even though they do not own the drill rigs) since they already do work in the North Sea which is the most treacherous in the world for deep sea drilling, exploration and production.
Current Arctic sea ice cover is about the same as it was back in the 1994. And temperatures in the Arctic are below normal. Shell would have a hard time getting a drilling rig through the ice.
http://stevengoddard.wordpress.com/2013/02/24/devastated-arctic-almost-identical-to-twenty-years-ago/