Environmental groups to seek suspension of Shell permits in Arctic region


WASHINGTON -- An accident involving Royal Dutch Shell's drilling rig in the Gulf of Alaska is giving fresh ammunition to environmental groups to call for a suspension of drilling and exploration permits in the Arctic Ocean.

Several environmental groups, including the influential Natural Resources Defense Council, say they plan to ask the Obama administration in coming days to put a formal hold on permits in the region.

The request comes after a drilling rig owned by Shell broke free of a tug boat late last week and then wedged itself on rocks off Sitkalidak Island. Environmental groups, which have long opposed drilling in the Arctic, say the accident demonstrates how risky it is for oil companies to operate in the icy, foggy and often stormy conditions near Alaska.

Such a request, if granted, could impact Shell and other oil companies' plans to return to the Arctic this summer. Shell has already received approval for multiyear exploration plans, but it still needs a few permits before it can continue operating in the region.

"Shell is not Arctic ready," said Chuck Clusen, a director at the Natural Resources Defense Council. "The risks are too big to get this wrong."

Shell's exploratory wells off Alaska's northern coast, started last year, were the first such operations in US Arctic waters in more than two decades.

"When flawless execution does not happen, you learn from it, and we will," Shell spokesman Curtis Smith said. "In the years to come, we look forward to adding to our positive history here."

Shell's $5 billion Arctic drilling program has been plagued by mishaps nearly from the start. Lingering ice prevented the company from dispatching its two rigs to the region for months. Once in Alaska, one rig used by Shell, Nobel Corp.'s Discoverer, nearly ran aground in July after becoming unmoored while in port. Equipment failures on the rigs have also been a problem.

The top Democrat on the House Natural Resources Committee, Rep. Ed Markey of Massachusetts, sent a letter to Shell and the US Coast Guard on Thursday seeking information on Shell's contingency plans for accidents in the Arctic.

The accident involving Shell's Kulluk rig "raises serious questions about the company's ability to conduct these operations safely and in a way that protects the environment," Markey said in a letter to the Coast Guard.

The Kulluk drilled exploratory wells in the Arctic until October, normally when inclement weather marks the end of the drilling season. The rig began drifting Friday after a tug boat pulling it to Seattle for maintenance lost an engine.

Other tug boats arrived Sunday to help it continue the voyage, but by the next day 35- to 45-foot seas and 50-knot winds caused the tow cables to fall away and sent the rig adrift. The Kulluk plowed into the island shortly before New Year's Eve.

A salvage crew sent by the Coast Guard onto the rig Wednesday evening found it to be in stable condition with no fuel leaking from its hull. The Kulluk contains more than 150,000 gallons of diesel and lubricants used in its drilling operations.

Shell has said that the accident was a transportation issue and didn't reflect on the overall safety of drilling in the region. The rig's design also makes it resistant to punctures that would lead to leaks, the company said.

"As demonstrated by the strength and integrity of the Kulluk, we could easily wait the five or six days for help needed to get an in-Arctic response," a Shell spokesperson said Thursday on Twitter.

The Interior Department, which oversees offshore oil drilling, wasn't available for immediate comment.

Dow Jones Newswires

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