Is Arctic Drilling Just One Mistake Away From Disaster?

How many more near-misses from Shell will the Obama administration tolerate before pulling the plug?

(Photo: Attila Kisbenedek/Getty Images)

Jan 21, 2013· 4 MIN READ
Stephen Lacey is a Senior Editor at Greentech Media, where he reports on the business of cleantech. He was formerly Deputy Editor of Climate Progress. He writes daily on clean energy policy, technologies, and finance.

The next 60 days are going to be important ones for the Obama Administration. Not because of brewing debt-ceiling negotiations, or gun control, or any of the other second-term priorities that everyone talks about in Washington. They’re going to be crucial for the future of the Arctic.

The closest permanent Coast Guard station to Shell’s Arctic offshore drilling site is 1,000 miles away by plane and more than 2,000 miles away by sea.

Over the next two months, the Interior Department will be conducting a review of Royal Dutch Shell’s offshore oil drilling operations in the Arctic Ocean. As the region rapidly melts due to global warming, oil and gas companies are eyeing previously inaccessible fossil fuel deposits in Arctic waters. Shell, which has spent $4.5 billion to build up its Arctic operations, is the first company to get permits from the Interior Department for exploratory drilling in the Beaufort and Chukchi Seas off the coast of Alaska.

But after a year marked by mishaps, warnings, and environmental infractions, the Interior Department has decided to speed up its review of Shell’s operations. The next two months could be pivotal for the future of America’s Arctic drilling policy.

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By now, most people have heard about Shell’s most recent debacle in the Arctic Ocean. On New Year’s Eve, as the company was towing its Kulluk offshore drilling rig from Alaskan waters to a southern port (through a vicious storm, allegedly to avoid paying taxes), the vessel broke loose and grounded on a remote island. The crew had to be evacuated, the Coast Guard had to fly in to help, and Shell was unable to move it for days.

It would have been an alarming story even if it had been Shell’s first problem. But it was just one of a series of mishaps that defined the company’s first season in the Arctic.

Consider just a few of the company’s problems last year: In July, Shell lost control of its Noble Discoverer drilling rig and almost ran it aground in Dutch Harbor, Alaska; in September, during testing of an oil spill containment equipment, Shell’s system completely failed and “crushed like a beer can” under the milder waters of the Puget Sound; and in November, Coast Guard criminal investigators docked the Noble Discoverer after finding major problems with the ship’s water management and pollution safety systems. These are just a handful of more than 30 environmental and safety infractions discovered by regulators throughout the year.

For a complete overview of Shell’s drilling season, the Center for American Progress has put together a timeline of every mishap.

It’s not just environmentalists calling attention to the dangers of drilling in the region.

“If this [an oil spill] were to happen off the North Slope of Alaska, we’d have nothing. We’re starting from ground zero today...we have zero to operate with at present,” said Coast Guard Admiral Robert Papp to Congress, when asked about Arctic resources.

Consider this: When Shell’s Kulluk drilling rig ran aground, the company had access to a permanent Coast Guard station 50 miles away. That enabled a fast response. But the closest permanent Coast Guard station to Shell’s Arctic offshore drilling site is 1,000 miles away by plane and more than 2,000 miles away by sea.

Major companies are responding to these challenges. Total SA, the world’s fourth largest publicly traded oil firm, warned that offshore drilling could be an environmental and public relations “disaster”; Lloyds of London, one of the largest insurance pools in the world, called Arctic offshore drilling a “unique and hard-to-manage risk”; and the Norwegian oil giant Statoil said it would suspend Arctic drilling after watching Shell’s problems mount.

So what does all this mean for the Obama Administration? The incessant series of problems throughout 2012 certainly gives the Interior Department a lot to consider as it conducts its emergency 60-day review of Shell’s operations.

Interior Secretary Ken Salazar seems to agree. “It’s troubling that there was such as series of mishaps. There is a troubling sense I have that so many things went wrong,” he said after announcing the review.

As expected, a broad range of environmental groups monitoring Shell’s operations are calling for an immediate suspension of drilling permits in the region. Other groups worried about transparency are asking for Interior to open up its review to the public, rather than meet with industry representatives behind closed doors.

But beyond any immediate action on Shell’s drilling operations, there are two broad issues the Interior Department needs to consider.

First, the agency needs to take a long, hard look at Shell’s oil response plan. Last year, the company claimed it could “encounter” 90 percent of any oil spilled in Arctic waters. Although experts swiftly debunked that assertion, the New York Times reported that Interior Secretary Salazar “believed the company’s claims.”

“We’ve never proven anywhere in the world—let alone in the ice—that we’re very good at picking up more than 3 or 5 or 10 percent of the oil once it’s in the water,” said retired Coast Guard Admiral Roger Rufe. Indeed, only 8 percent of oil was recovered after the Exxon Valdez oil spill in Alaska.

But that still hasn’t changed the policies of the Interior Department, which approved exploratory drilling permits based on a spill response plan that experts say is wildly optimistic. Now that we’ve seen such a broad series of problems—including the failure of Shell’s oil spill containment equipment in benign conditions—it’s time to reconsider Shell’s claims about its ability to respond to an oil spill.

Secondly, the Interior Department needs to bring climate back into its review. In an Environmental Impact Statement issued in 2011, the agency wrote that “the Arctic is experiencing variations that are accelerating faster than previously realized” due to global warming. However, it failed to mention the cause: fossil fuels.

Allowing companies to take advantage of the melting Arctic by exploiting fossil fuels responsible for melting it in the first place is a pretty backward policy. If the Obama Administration is serious about dealing with climate in a second term, the Interior Department needs to better integrate the climate implications of Arctic drilling into its policies.

After Shell’s recent series of problems, Americas are starting to pay attention to efforts to drill for oil in Arctic waters. As Interior reviews its approach to the issue under more media scrutiny, it must reevaluate both Shell’s immediate plans and the broader implications of its policies.

Should the U.S. have allowed Shell to drill for oil in the Arctic? Tell us your thoughts in the COMMENTS section below.