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Feds rap Shell for poor planning in botched tow of 2012 Arctic drilling rig

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By Jennifer A. Dlouhy: 28May 2015

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Geoff Merrell, superintendent of emergency response, Shell Alaska: Photo: Jennifer A. Dlouhy/The Houston Chronicle

WASHINGTON — The National Transportation Safety Board on Thursday blamed the grounding of Shell’s Kulluk drilling rig on the company’s failure to adequately assess the risks of towing the vessel across predictably stormy Alaska seas in 2012.

The independent federal agency’s findings, released Thursday, represent the third major government report on what went wrong when Shell Oil Co. and its contractors tried towing the Kulluk across Gulf of Alaska waters in December 2012 — only to have the rig run aground on Sitkalidak Island following a failed five-day fight to get control of it.

“No single error or mechanical failure led to this accident,” the NTSB said. “Rather, shortcomings in the design of a plan with an insufficient margin of safety allowed this accident to take place. The plan was created to move the (mobile offshore drilling unit) at a time of year with a known likelihood of severe weather conditions for reasons unrelated to operational safety.”

The NTSB report comes at a pivotal time for Shell, which has asked federal regulators for permission to resume exploratory oil drilling in the Chukchi Sea as soon as July.

The Interior Department’s Bureau of Ocean Energy Management has already approved Shell’s broad plans to bore up to six wells in those Arctic waters during ice-free drilling seasons this summer and next. But the company is waiting on a handful of other authorizations, including drilling permits from the Bureau of Safety and Environmental Enforcement, before it can launch the work.

The botched Kulluk tow job came months after Shell had finished drilling the top portions of one well each in the Beaufort and Chukchi seas, when the company began moving the non-propelled drilling rig from Dutch Harbor, Alaska to a Seattle shipyard.

Shell contractor Edison Chouest began towing the Kulluk with its anchor handling vessel, the Aiviq on Dec. 21, 2012. But six days later, when the vessels ran into a series of storms near Kodiak Island, the tow line broke and on Dec. 28, 2012, Aiviq’s four engines failed. The Coast Guard tried but failed to connect a new tow line to the Kulluk, evacuated most of the Kulluk’s crew and delivered spare parts to the Aiviq, allowing partial engine power to be restored on the ship.

Although towlines were briefly reconnected between the Kulluk and the Aiviq as well as another tugboat, the Alert, on Dec. 31, once the connection to the Aiviq failed, officials instructed the struggling Alert to release its line for safety reasons.

That sealed the Kulluk’s fate.

Roughly a half hour later, at 8:48 p.m. on Dec. 31, the rig plowed into the rocky seabed on Alaska’s uninhabited Sitkalidak Island.

A Coast Guard probe, completed last year, blasted Shell and its contractors for deciding to tow the drilling rig across the “notoriously treacherous” Gulf of Alaska, asserting that financial considerations — including a potential multi-million dollar tax bill from the state of Alaska — played a role in the timing.

Read more: Coast Guard blames 2012 Arctic rig grounding on bad decisions

A separate Interior Department analysis also faulted Shell’s oversight of contractors, saying the company appeared to be focused “on compliance with prescriptive safety and environmental regulations . . . rather than on a holistic approach to managing and monitoring risks.”

Shell’s executive vice president for the Arctic, Ann Pickard, has stressed the company has radically improved its approach to overseeing contractors involved in its Alaska operations, with daily phone calls to share lessons learned among them, a detailed, down-to-the-minute operations plan outlining planned vessel movements and more Shell managers overseeing individual contractors.

Where one of those Shell managers was handling seven contracts in 2012, now they are parceled among 49 different employees. One of them is in charge of just one: Shell’s contract with Edison Chouest.

Pickard said “you can’t compare” the level of planning in 2012 “to where we are today,” because there have been so many changes, some directed by a deep internal audit Shell conducted after the Kulluk incident.

At the time, Pickard noted, with key permits and approvals coming far later than expected, the focus was on getting in to the Chukchi and Beaufort seas to drill during what remained of the brief ice-free window. As a result, Pickard said, the company planned “decently” going forward into the drilling operations, but “it wasn’t decently planned coming out.”

Shell spokesman Curtis Smith said Thursday that the company was reviewing the National Transportation Safety Board report.

“We have already implemented lessons learned from our 2012 season and have engaged extensively with the regulators,” Smith said. “As we prepare for a 2015 exploration season, we will continue to test and prepare our personnel, assets and contingency plans against the high bar stakeholders and regulators expect of an Arctic operator.”

Environmentalists who argue the entire endeavor is too risky say they have no way to independently assess Shell’s operations — including how much the company learned from mishaps in 2012. An independent audit of the company’s management systems — ordered by the Interior Department in 2013 — has not been publicly released to Greenpeace and other groups that have requested it under a Freedom of Information Act request.

“Why should we take Shell’s word for it that the company has learned its lesson from the wreck of the Kulluk?” said Greenpeace USA spokesman Travis Nichols. “The Department of Interior needs to make the results from the third-party audit available publicly, so we all can have some kind of proof that this summer won’t just be the sequel to 2012’s epic dud.”

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