April 18, 2024

Shell Will Pause Arctic Drilling in 2013 After Ship Accidents

The company’s two drill ships suffered serious accidents as they were leaving drilling sites in the Beaufort and Chukchi Seas last fall and winter and are being sent to Asia for repairs. Shell acknowledged in a statement that the ships would not be repaired in time to drill during the short summer window this year.

“Our decision to pause in 2013 will give us time to ensure the readiness of all our equipment and people,” said Marvin E. Odum, president of Shell Oil Company.

He said Arctic offshore drilling was a long-term project that the company would continue to pursue.

The Interior Department, the Coast Guard and the Justice Department are reviewing Shell’s operations, which have included groundings, environmental and safety violations, weather delays, the collapse of its spill-containment equipment and other failures.

Shell has invested more than $4.5 billion in leases and equipment and spent several years on an intensive lobbying campaign to persuade federal officials that it could drill safely in the unforgiving waters of the Arctic Ocean. It now acknowledges that the venture has been much more difficult than it anticipated.

Shell had planned to drill as many as 10 wells in 2012 but was able to start only two. Federal regulators barred the company from drilling into oil-bearing formations because it did not have adequate spill prevention and cleanup equipment available.

“This is not a surprise, as Shell has had numerous serious problems in getting to and from the Arctic, as well as problems operating in the Arctic,” said Lois N. Epstein, Arctic program director for the Wilderness Society and a member of the Interior Department panel reviewing Shell’s operations.

“Shell’s managers have not been straight with the American public, and possibly even with its own investors, on how difficult its Arctic Ocean operations have been this past year,” she said.

Both ships involved in the drilling, the Noble Discoverer and the Kulluk, suffered serious accidents while moving to or from the oil fields. In addition, Coast Guard inspectors found numerous violations on the Discoverer and have referred the matter to federal prosecutors for investigation.

Shell executives said the Kulluk sustained damage to its hull when it was grounded on tiny Sitkalidak Island during a fierce storm in late December. Seawater also caused electrical damage.

They said the propulsion systems on the Noble Discoverer required maintenance and might need to be replaced for the ship to be seaworthy and pass Coast Guard inspections.

The Noble Discoverer dragged its anchor last July and nearly ran aground on the Alaska coast. Four months later it was damaged by an explosion and fire while in port in the Aleutian Islands.

Senator Lisa Murkowski, Republican of Alaska, a strong proponent of Arctic oil exploration, said the delay would ensure that drilling could proceed safely in the future.

“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 that will ensure a safe return to exploration soon,” Ms. Murkowski said in a statement.

Michael LeVine, senior Pacific counsel for the environmental advocacy group Oceana, said that Shell and the federal authorities who allowed it to begin drilling needed to think carefully about whether it would ever be safe to resume operations.

“The decisions to allow Shell to operate in the Arctic Ocean clearly were premature,” Mr. LeVine said in an e-mail. “The company is not prepared and has absolutely no one but itself to blame for its failures.”

Article source: http://www.nytimes.com/2013/02/28/business/energy-environment/shell-suspends-arctic-drilling-for-2013.html?partner=rss&emc=rss

Obama to Set Goal of One-Third Cut in Oil Imports

The president, in a speech to be delivered at Georgetown University, will say that the United States needs, for geopolitical and economic reasons, to reduce its reliance on imported oil, according to White House officials who provided a preview of the speech on the condition that they not be identified. More than half of the oil burned in the United States today comes from overseas and from Mexico and Canada.

Mr. Obama will propose a mix of measures, none of them new, to help the nation cut down on its thirst for oil. He will point out the nation’s tendency, since the first Arab oil embargo in 1973, to panic when gas prices rise and then fall back into old gas-guzzling habits when they recede.

He will call for a consistent long-term fuel-savings strategy of producing more electric cars, converting trucks to run on natural gas, building new refineries to brew billions of gallons of biofuels and setting new fuel-efficiency standards for vehicles. Congress has been debating these measures for years.

The president will also repeat his assertion that despite the frightening situation at the Fukushima Daiichi reactor complex in Japan, nuclear power will remain an important source of electricity in the United States for decades to come, aides said.

He will respond to members of Congress and oil industry executives who have complained that the administration has choked off domestic oil and gas production by imposing costly new regulations and by blocking exploration on millions of acres of potentially oil-rich tracts both on shore and off.

The administration is not prepared to open new public lands and waters to drilling, officials said, but will use a new set of incentives and penalties to prod industry to develop resources on the lands they already have access to.

The Interior Department on Tuesday issued a paper saying that more than two-thirds of offshore leases in the Gulf of Mexico and more than half of onshore leases on federal lands are unused. Oil industry officials called the paper a smokescreen to cover the administration’s stingy approach to drilling permits.

“This is an effort to distract the American people from rising gas prices and the fact that the administration has been delaying, deferring or denying access to our oil and natural gas resources here at home,” said Erik Milito, the director of exploration policy at the American Petroleum Institute. “Lease sales have been delayed or canceled, and this year, for the first time since 1957, we may not have a single offshore lease sale.”

White House officials indicated that Mr. Obama was turning to energy issues after a period of intense focus on turmoil in Libya and elsewhere in North Africa and the Middle East. He will link them by saying the United States cannot be secure as long as it depends on potentially unstable monarchies and dictatorships for a large part of its daily petroleum diet. The reduction in oil imports he has set as a target — roughly three million barrels a day over 10 years — corresponds roughly to current import levels from the Middle East and Africa.

Presidents since Richard M. Nixon have made this point, and American oil imports have continued to rise, except when slowed by recession.

Republicans in Congress have grown increasingly vocal about the administration’s energy and environment policies, saying they discourage domestic oil and gas development and impose heavy costs on industry in a period of economic angst. On Tuesday, House Republicans introduced three bills to reverse the administration’s offshore oil drilling policies, calling for vast new tracts of offshore territory to be opened to deep-water drilling and for speedier approval of drilling permits.

On the Senate floor, Mitch McConnell of Kentucky, the Republican leader, denounced the president for a variety of alleged energy sins, including telling Brazilian officials last week that the United States would be an eager consumer for its offshore oil.

“You can’t make this stuff up,” Mr. McConnell said.

“Here we’ve got the administration looking for just about any excuse it can find to lock up our own energy sources here at home,” he said, “even as it’s applauding another country’s efforts to grow its own economy and create jobs by tapping into its own energy sources.”

The administration imposed a moratorium on most deep-water drilling activities in the aftermath of the Deepwater Horizon explosion, which killed 11 rig workers and sent nearly five million barrels of oil into the Gulf of Mexico. The Interior Department wrote new safety and environmental rules for offshore drilling and officially lifted the moratorium in October.

The department has now issued seven permits for activities that were halted under the suspension, with 12 other deep-water permits pending. An additional 24 permit applications have been returned to applicants for more information.

Mr. Obama is also expected to renew his call from the State of the Union address to increase the percentage of electricity produced from so-called clean sources to 80 percent from the current 40 percent by 2035. The president’s definition of clean energy includes renewable sources like wind, solar, hydro and geothermal, as well as nuclear, natural gas and coal with carbon capture and storage, an as-yet-unproved technology.

On Friday, the president will appear at a United Parcel Service depot in Landover, Md., to talk about ways to make commercial truck and bus fleets more fuel-efficient and to make greater use of domestically produced natural gas in transportation.

Article source: http://feeds.nytimes.com/click.phdo?i=b2aee37c93b0b798441865037d01c95b