Interior Dept. report criticizes Shell

The Interior Department issued a report sharply critical of Shell’s exploration drilling efforts in the Chukchi Sea off Alaska last year, but Secretary Ken Salazar gave the company the go-ahead to try again in 2014.

Environmental groups harshly criticized the report and said it raised questions about the department’s ability to conduct independent regulatory oversight.

“Exploration in the Arctic is a key component of the President’s all-of-the-above energy strategy, and is important to our understanding of the oil and gas potential in this frontier region,” Salazar said after the completion of a 60-day review by the department that recommended companies follow “Arctic specific” standards.

Shell has already announced a “pause” in its drilling plans after a series of delays and mishaps culminating in its rig, the Kulluk, getting damaged in a storm when it ran aground on its way to port.

Shell has spent nearly $5 billion and several years preparing to drill for oil in the Chukchi Sea off Alaska’s Arctic coast. Harsh weather limits the drilling season there to about three or four months and Shell’s plans were delayed both by its trouble getting federal approval of its containment system and by an unusually late ice season. Eventually the company pared back its plans and instead of completing two to six exploration wells it installed blowout preventers on the top of partially drilled wells.

Interior recommended that Shell hire a third party to audit the company’s management systems to make sure they are tailored for Arctic conditions and address the problems encountered during the 2012 drilling season.

Environmental groups said the extra measures weren’t enough.

“It’s meaningless to talk about comprehensive, ‘Arctic-specific’ drilling plans when we now know better than ever that there is nothing predictable about conditions in the Arctic,” Chuck Clusen, director of national parks and Alaska projects for the Natural Resources Defense Council, said in a statement. “Arctic-specific plans are a band-aid approach to a life-threatening problem.”

Lois Epstein, an engineer and Arctic program director for the Wilderness Society, said that “after all the reports that were submitted to Interior, this additional report does not give the public confidence that key concerns with these extraordinarily complex drilling and marine transport operations will be addressed.”

Shell vowed to press ahead.

“We will use this time to apply lessons learned from this review, the ongoing Coast Guard investigation and our own assessment of opportunities to further improve Shell’s exploration program offshore Alaska,” Shell spokesman Curtis Smith said in an e-mail. “Alaska remains a high potential area over the long-term, and we remain committed to drilling there safely, again.”

And Interior credited Shell with using caution, but said it needed to do more.

“Shell simply did not maintain strong, direct oversight of some of its key contractors,” said Tommy Beaudreau, principal deputy assistant secretary for land and minerals management. Citing the Arctic’s “challenging conditions,” Beaudrau said, “In some areas Shell performed well, but in other areas they did not, and Alaska’s harsh environment was unforgiving.”

Steven Mufson covers the White House. Since joining The Post, he has covered economics, China, foreign policy and energy.
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