After Accidents, U.S. To Review Shell's Drilling In Arctic Ocean

Melissa Block talks with science correspondent Richard Harris about Shell's troubled history in the Arctic.

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MELISSA BLOCK, HOST:

The U.S. government has begun an urgent high level review of drilling operations in the Arctic Ocean run by the Shell Oil Company. The move follows a series of accidents and trouble with Shell's drilling rigs and oil spill response equipment. Shell is a major presence in the Arctic. The company has spent more than $4.5 billion on exploration there. NPR science correspondent Richard Harris has been reporting on Shell's efforts and he joins me now.

And Richard, let's start with what's happening right now. One of Shell's oil rigs ran aground on New Year's Eve off the coast of Alaska. What's the status of that rig now?

RICHARD HARRIS, BYLINE: Well, the Kulluk, yeah, did hit the rocks off of Kodiak Island after the tugboats that were carrying it lost control of it in a big storm. Not unusual storm, but a bit storm for Alaska and after sitting on the rocks for a week, they've towed it into a quiet bay. It's now being examined by unmanned underwater submarines and Shell hopes that if it is all OK that it will tow it to Seattle for repairs.

But if those repairs are extensive, which is possible, that could set them back. They might not be able to drill next season.

BLOCK: And there was concern about an oil spill from that rig. That didn't happen, right?

HARRIS: There was no oil spill, that's correct.

BLOCK: That is just the latest of Shell's troubles, though, Richard. What else has gone wrong for them?

HARRIS: Well, last summer, the other drilling rig that Shell was using broke its moorings at a harbor in the Aleutian Islands. Shell says it didn't actually come aground, but it was certainly close, when you look at the pictures. Also, the oil spill equipment that was being tested in Puget Sound by Shell and its contractors failed spectacularly. One huge piece that was sort of a capping dome ended up crushed like a beer can in the words of one of the federal observers onboard.

Another oil response vessel has actually had a huge amount of trouble getting certified by the Coast Guard and as a result of that, last summer, Shell could drill a little bit into the ocean, but they couldn't drill into oil bearing rock. And on top of all that, just yesterday, the EPA said that Shell's scaled back operations in the Arctic still violated their air pollution permits and so they got a bunch of violations they have to sort out as well.

BLOCK: We mentioned a multi-billion dollar investment by Shell in the Arctic. They obviously see huge potential for what's in those waters.

HARRIS: Shell obviously believes there's a lot of oil down there, so do many other geologists and Shell paid more than $2 billion to the federal government just for leases, just the right to explore down there. And once they got those leases, they've invested more than $2 billion in all sorts of other equipment and getting everything geared up ready to go.

So that's a big investment to being with, plus if they find oil, it will take another decade, probably, to build the pipelines and the other mechanism you need to get the oil to market. So this investment is just the beginning.

BLOCK: Now, environmental groups have sued to slow or stop this offshore drilling in the Arctic. What are they saying? What's their argument?

HARRIS: Their argument is, first of all, that Shell doesn't seem to be able to do the basics here. But even with that, they note that this is a very harsh environment. It's 1,000 miles, really, from major Coast Guard facilities. There's very few resources up there if there is a spill and it's icy waters and it would be difficult to deal with a spill anyway in icy waters.

And on top of all of that, the native Alaskans rely on these waters for subsistence, fisheries and for traditional hunting and so on. So there's a lot at stake.

BLOCK: And we mentioned this urgent high level review now that the U.S. Interior Department has begun. What impact could that have, both on Shell and on other oil companies?

HARRIS: Well, the administration clearly could say no to Shell to stop oil drilling up there, but the reality, I think, is that the administration is strongly stating its all-of-the-above energy strategy and it's inalterably opposed to drilling in the Arctic Ocean. So they're unlikely just to shut the whole operation down. But Shell's tale of woe has triggered this 60-day review and serious questions about whether the company really is in a position to drill safely up there.

And I think the results of this could have somewhat of a ripple effect. Shell is not the only company that's interested in the Arctic. ConocoPhillips and (unintelligible) Oil also have leases in federal waters up there. It is worth noting one that one French company, Total, says they've decided not to drill in the Arctic because they think that the risks of a spill are so bad that they just don't want to give it a try.

BLOCK: OK. NPR's Richard Harris. Richard, thanks.

HARRIS: My pleasure.

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