• Shell halts 2013 drilling plans in Alaska's Arctic seas

    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.

    By Yereth Rosen, Reuters

    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:

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    Shell sues environmental groups to score drilling rights

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  • Salvage crew boards grounded drilling rig in Alaska

    Tropical storm force winds and massive winds caused a drilling ship to run ashore near Kodiak, Alaska. KTUU's Adam Pinsker reports.

    By NBC News staff and wire services

    A team of six salvage experts boarded, on Wednesday, an oil drilling rig  that went aground off an uninhabited island in the Gulf of Alaska.

    The team was lowered to the Kulluk by a Coast Guard helicopter to conduct a structural assessment of the rig. The experts were on board the rig for about three hours.

    Earlier efforts to board the rig were put on hold due to severe weather conditions over the past several days. Conditions were calmer on Wednesday.


    The Kulluk broke loose of its tether to a tug boat in stormy seas last week and grounded onto a sand and gravel beach.

    A slight break in the weather – 30 mph winds and 6-foot waves with 12-foot swells -- gave a team of Coast Guard, local and company officials optimism that salvage teams could be put in place, Jason Moore, a unified command spokesman told NBC News on Wednesday.

    “It’s not great, but it’s better than what it has been over the last several days,” Moore said. “It is a bit of a break and were hoping we can take advantage of the improving weather”  

    The Kulluk remained stranded but stable off Sitkalidak Island, which is along the southeastern coast of Kodiak Island in the Gulf of Alaska, Moore said. A Coast Guard cutter stationed to observe overnight Tuesday reported no leaks, he said.

    A Coast Guard plane and helicopter flew over the Kulluk on Tuesday but poor weather didn’t permit marine experts to board the vessel.

    Officials were hoping to get marine experts onboard to take photos and videos, and then come up with a more complete salvage plan once weather permits.

    The Royal Dutch Shell drilling rig is carrying about 143,000 gallons of diesel fuel and about 12,000 gallons of lube oil and hydraulic fluid, according to federal on-scene response coordinator Capt. Paul Mehler.

    Environmentalists have seized on the accident as proof Arctic Ocean oil operations are too risky. The drilling rig was being moved from its Arctic drilling grounds to Seattle for maintenance, and had passed through the Bering Sea and was set to cross the Gulf of Alaska when the storm hit.

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    “Oil companies keep saying they can conquer the Arctic, but the Arctic keeps disagreeing with the oil companies,” Rep. Ed Markey, D-Mass., a member of the Natural Resources Committee, said in a statement.

    A plan was being prepared in the event of a spill in the Partition Cove and Ocean Bay areas of the island. The area is home to at least two endangered species, as well as harbor seals, salmon, and sea lions.

    Pa3 Jon Klingenberg / AP

    This 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 Tuesday.

    Mehler said a team of about 500 people was working on a plan, "with many more coming."

    A Shell official said the drilling rig was built with a double-sided hull of reinforced steel that is 3 inches thick. It recently had undergone $292 million in improvements before being put into service for a short time this summer in the Beaufort Sea off Alaska's north coast.

    It was being towed to Seattle for maintenance last week when it separated from a towing vessel south of Kodiak Island. Repeated attempts to maintain towing lines were unsuccessful as a severe storm passed through the area. By Monday night, tow boats guided the rig to a place where it would cause the least environmental damage and cut it loose.

    Sean Churchfield, operations manager for Shell Alaska, said once the situation is under control, an investigation will be conducted into the cause. He did not know whether the findings would be made public.

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    The Coast Guard said it also would investigate and make its findings public.

    NBC News staff contributed to this report from The Associated Press.

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  • Storm-tossed Shell drilling ship runs aground off Alaska

    By Tracy Connor, Staff Writer, NBC News

    There were no immediate signs of a fuel spill from a storm-battered drilling rig that ran aground in Alaska on Monday, but environmentalists have seized on the accident as proof Arctic Ocean oil operations are too risky.


    A nighttime Coast Guard helicopter flyover detected no sheen on the water off along the rocky coast of uninhabited Sitkalidak Island, just off the southeastern shore of Kodiak Island, said a spokeswoman for Shell, which owns the 28,000-ton Kulluk.

    More flights during the day on Tuesday are needed to determine if the Kulluk spilled any of its 150,000 gallons of diesel fuel or caused other environmental problems.

    The mishap late Monday, the culmination a high-seas drama that started unfolding last week, alarmed critics of Shell’s offshore drilling program in Alaska.

    “Oil companies keep saying they can conquer the Arctic, but the Arctic keeps disagreeing with the oil companies,” Rep. Ed Markey, D-Mass., a member of the Natural Resources Committee, said in a statement.

    In Arctic battle, Shell starts preliminary drilling

    Lois Epstein, Arctic program director for The Wilderness Society, told Reuters that either the federal government or Shell should shut down the $4.5 billion drilling program “given the unacceptably high risks it poses to both humans and the environment.”

    Shell officials said they were confident a spill would be avoided.

    “The unique design of the Kulluk means the diesel fuel tanks are isolated in the center of the vessel and encased in very heavy steel,” Susan Childs, the oil giant’s on-scene coordinator, told The Associated Press.

    “When the weather subsides and it is safe to do so, we will dispatch crews to the location and begin a complete assessment.”

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     The Kulluk, built in 1983 and given a $292 million upgrade for its Arctic mission, was being towed to Seattle for the off-season when the crisis began.

    Shell’s towing ship, the Aiviq, lost its connection to the rig because of a busted shackle and then suffered engine failure. A Coast Guard cutter that raced to the rescue wound up with a broken propeller.

    With extreme weather moving in, the Coast Guard evacuated all 18 of the Kulluk’s crew members on Saturday.

    On Monday, the repaired Aiviq reconnected with the Kulluk and was towing it north when disaster struck again:  the line broke, leaving only a tug, the Alert, attached.

    “Once the Aiviq lost its tow, we knew the Alert could not manage the Kulluk on its own, as far as towing,” Coast Guard Commander Shane Montoya said at a Monday night news conference.

    Instead, the tug guided the Kulluk toward a low-impact spot and then disconnected with 30 minutes to spare before the inevitable grounding, to protect its own crew of nine.

    With winds gusting to 70 mph and the seas cresting at 35 feet, the Kulluk then ran around about 9 p.m. Alaska time.

    “We are now entering into the salvage and possible spill-response phase of this event,” Montoya said at a news conference a few hours later.

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  • In Arctic oil battle, Shell starts preliminary drilling

    Shell

    Shell's Noble Discoverer drilling rig sits above an oil field in Alaska's Chukchi Sea on Saturday, Sept. 8.

    By Miguel Llanos, NBC News

    More than 20 years after the last drill bit went into the Chukchi Sea floor off northern Alaska, a Shell drilling rig on Sunday began work that the company hopes will lead to a bonanza that adds to its bottom line and extends Alaska's oil economy.


    "Today marks the culmination of Shell’s six-year effort to explore for potentially significant oil and gas reserves, which are believed to lie under Alaska’s Outer Continental Shelf," Shell Alaska Vice President Pete Slaiby said in a statement.

    Welcomed by the Obama administration, the exploration in Alaska's Arctic waters has become a major battleground for environmental groups, which fear oil spills in the pristine area already threatened by warming temperatures and reduced sea ice.

    "The melting Arctic is a dire warning, not an invitation to make a quick buck," said Dan Howells, a campaign director for Greenpeace.

    Shell has paid the U.S. $2.8 billion for lease rights to areas in the Chukchi and neighboring Beaufort Sea, and the U.S. estimates those waters hold 26 billion barrels of recoverable oil and 130 trillion cubic feet of natural gas.

    On Aug. 30, Interior Secretary Ken Salazar announced that Shell, even though its spill response barge was not yet certified by the Coast Guard, would be permitted to drill pilot holes and then dig what's called a cellar to hold a critical safety device.

    The pilot holes will be 1,300 feet below the ocean floor and roughly 4,000 feet above a known petroleum reservoir. 

    Marvin Odum, Shell Oil president, discusses Tropical Storm Debby and its impact on oil production, oil drilling in Alaska and more, with CNBC's Maria Bartiromo.

    Shell argues there's little chance of a spill like BP's 2010 Gulf of Mexico disaster. Drilling will be in water about 130 feet deep, it says, versus 5,000 at the site of the gulf spill, and wellhead pressure is expected to be far less.

    Support vessels could quickly choke off and cleanup any spill, Shell adds. 

    Workers on Friday moored the drill ship, the Noble Discoverer, in heavy seas with eight anchors that each weigh 15 tons. The diameter of the circular pattern of anchors is more than 6,500-feet, it added.

    The immediate goal is to dig a 20-by-40-foot mud-line cellar that will house a blowout preventer below the seafloor, protecting it from ice scraping the bottom.

    Shell's oil spill response barge remains in Bellingham, Wash., and is expected to undergo sea trials over the weekend, Shell said.

    Shell

    This illustration shows how far drilling will go for now, as well as what the cellar for the blowout preventer will look like.

    Shell last explored in the area in 1991, but it was not economically viable to produce from there at the time.

    Shell's other Arctic Ocean drill ship, the Kulluk, is in the Beaufort Sea waiting for the fall whale hunt to end before moving to the drill site.

    The company isn't expecting to drill for oil until next year, since it only has a few weeks before sea ice forms in the area. It will then resume drilling next summer.

    The Associated Press contributed to this report.

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  • Shell scales back Arctic drilling this summer

    Capt. Kristjan B. Laxfoss via AP

    A Shell drilling ship drifts near shore on Unalaska Island, Alaska, on July 14. ship lost its mooring but did not ground and was not damaged, the Coast Guard said.

    By Miguel Llanos, NBC News

    The first drilling in Arctic waters off Alaska later this summer is being curtailed, Shell said Tuesday. The company focused on the ongoing presence of sea ice, while environmentalists pointed to the fact that Shell has yet to get certification for its spill containment system. 


    Shell had planned to drill five exploration wells this summer but now will aim for two as well as additional "top hole" locations, "meaning we will begin new wells which can be completed in 2013," Shell spokeswoman Kelly op de Weegh told NBC News.

    "We have continued to be delayed by the sea ice in place, and while the ice is just now beginning to clear near one of our locations, we are still monitoring for ice to clear elsewhere," she added.

    "If the ice had been cleared, we would be awaiting final testing and certification of the containment barge,' she said.

    The containment system was being tested Tuesday and later in the week, she said, adding that "we feel very good about the progress we’ve made."

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    The drilling will be in the Beaufort and Chukchi Seas. Thick Chukchi sea ice stands in contrast to thin ice or wide-open seas in other parts of the Arctic.

    Shell hopes drilling the "top holes" will allow it to get back on track and still have 10 wells drilled by the end of summer in 2013.

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    Shell suffered another setback in Dutch Harbor, Alaska, earlier this month when one of its exploration ships, the Discoverer, drifted toward shore and nearly grounded.

    Drilling opponents say the recent problems show why Shell's plans are too risky.

    "As Shell Oil continues to push to drill exploratory wells in our Arctic Ocean this summer, the oil giant is giving us a preview of how disastrous a situation this could be," Kristen Miller of the Alaska Wilderness League said in a statement. 

    Greenpeace USA questioned whether the mooring system in Shell's barge would be safe. "If the Coast Guard certifies this barge with a mooring system that can’t withstand strong storms, how will Shell handle an oil spill during such a storm," asked Jackie Dragon, the group's lead Arctic campaigner.

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  • Former steelworker hopes $2 billion chemical plant will revive Appalachia city

    Jason Cohn / Reuters

    First year apprentice ironworker George Vacheresse pauses during a class at Ironworkers Local 539 in Wheeling, West Virginia. Vacheresse was a steelworker for 17 years but decided to retrain after watching layoffs erode the workforce at his machinist shop over 17 years. He hopes his new skills will lead to a much higher-paying job.

    Jason Cohn / Reuters

    The town of Wheeling, West Virginia is emblematic of the economically struggling region it sits in, and could get a big boost from a new Shell chemical plant planned for the area. Real estate agents, restaurants, banks and others report a business jump that they expect to be made permanent by the arrival of chemical plants.

    Reuters reports from Wheeling, West Virginia — In George Vacheresse's lifetime, Appalachia has fallen from its prime when steel mills and coal mines anchored middle-class communities and offered hope there always would be enough work to go around.

    In this historically poor region nestled in the misty mountains of the eastern United States, most steel mills shut down long ago and the coal workforce has shrunk by 90 percent in the past 40 years.

    Now Vacheresse and other residents are counting on cheap natural gas from the massive reserves in the Marcellus and Utica shale rock formations to reinvigorate the region's economy.

    In the Northern Appalachia area alone, where West Virginia, Ohio and Pennsylvania converge, billions of dollars of investment is planned by major companies, including most recently Royal Dutch Shell, to recover the gas and build new chemical plants.

    "I hope it gives us jobs for everybody," said Vacheresse, 39, who last fall joined an apprentice scheme at a Wheeling, iron workers' labor union to learn how to work in steel construction. He made the move after watching layoffs erode the workforce at his machinist shop over 17 years. He expects his new skills will lead to a much higher-paying job building Shell's planned new $2 billion cracker, industry slang for a chemical plant.

    "Something like this could carry our region for years and years," he said. Read the full story.

    Jason Cohn / Reuters

    Charles Comas, owner of Comas Family Barber Shop on Main Street in Wheeling, West Virginia, finishes giving a hair cut to regular customer John Oliver on March 6, 2012. Oliver, who has lived in Wheeling his whole life, remembers when the now sparsely occupied downtown was so packed with people "you couldn't walk down the street without bumping into someone." He is skeptical that the burgeoning shale gas industry or the rumoured Shell cracker plant will help the city.

    Jason Cohn / Reuters

    A community garden is seen in a vacant lot left over from one of few demolished buildings on Main Street in Wheeling, West Virginia. The city is struggling to find creative ways to deal with their down economy while waiting for new investment.

    Jason Cohn / Reuters

    First year Ironworker apprentices (left-right) Ian Welshhans, Daniel Truax and Jason Taylor practice their welding skills during a class at the Ironworkers Local 549 training facility in Wheeling, West Virginia on March 6, 2012.

    Jason Cohn / Reuters

    An old Ohio Edison electric plant, rumored to be the site for the first new U.S. chemical cracker plant in more than 20 years, is seen across the Ohio river from Moundsville, West Virginia.

     

  • Shell sues environmental groups to score drilling rights

    By msnbc.com staff

    Shell, the global oil and gas company, sued more than a dozen environmental groups that oppose offshore oil drilling in the Arctic Ocean on Wednesday, the Los Angeles Times reported. The environmental groups hope to block Shell’s plans to drill exploratory wells this summer in the Chukchi Sea, between Alaska and Russia.

    The idea behind the suits, filed in U.S. District Court in Anchorage, is to beat environmental activists to court. Shell has already spent $4 billion on the project but has not yet started drilling.

    “This is a very unique legal approach. I’m not sure anything like this has ever been done before,” Shell spokeswoman Kelly op de Weegh told the LA Times.

    Shell, which is headquartered in the Netherlands, targeted, among others, the National Audubon Society, the Sierra Club and Greenpeace, which last week sent six activists, including the actress Lucy Lawless, to protest aboard an oil rig in New Zealand. According to AlaskaDispatch.com, Shell is also seeking damages from Greenpeace for its protest occupation.

    Actress Lucy Lawless arrested in oil-ship protest

    PDF: Shell seeks restraining order against Greenpeace

    Whit Sheard, a senior adviser for Oceana, told the LA Times he doesn’t believe Shell has adequately met the requirements of the law.

    “This cleanup plan, just like their previous cleanup plans, is woefully inadequate, based on technology that has never been proven, and continues to be too risky for the Arctic environment,” Sheard said.

    He added: “What are they trying to do, get the courts to declare something legal that hasn’t been challenged as illegal? It seems premature, and potentially unnecessary.”

    BP oil spill trial postponed as settlement talks make progress

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