Shell executives in Alaska are under massive pressure to prove to federal regulators by early next week that their plan to drill in Arctic waters this summer will not result in an oil disaster like the one unfolding in the Gulf of Mexico.
The executives are drafting a letter due next Tuesday to the head of the federal Minerals Management Service proposing additional measures the company will take to safeguard against a major oil spill.
Those proposals have not been fully vetted internally at Shell, but they will likely involve additional testing of undersea well equipment, reducing the response time for a backup drill rig to arrive in an emergency from the Canadian or U.S. Arctic, and increasing the remote-controlled devices and steel barriers used to seal a well during an emergency, company officials said Thursday.
The Department of the Interior, which has already canceled some planned oil lease sales in Lower 48 waters in the wake of BP's Gulf of Mexico spill, put Shell on notice a week ago that it falls under a temporary halt to all offshore drilling proposals in the United States. The department also announced it will not rule on the company's drill permit until a Minerals Management Service safety review, due to the White House by May 28, is evaluated.
Top Shell managers, during a two-and-a-half hour session with Daily News reporters this week, described the procedures and equipment they use to prevent well blowouts like the one that destroyed the Deepwater Horizon rig in the Gulf and led to an immense leak that is pouring tens of thousands of gallons of oil into the ocean per day.
Shell's critics point out that no matter what Shell does to tweak its safeguards, it can't guarantee that nothing will go wrong.
The Gulf disaster shows that federal regulators have done a poor job of overseeing the offshore oil industry, said Rebecca Noblin, an Anchorage-based attorney for the Center for Biological Diversity, which is appealing to block Shell's permits.
"Now we know that a spill can happen and be disastrous," she said.
SETBACKS
Shell often touts its history as the world pioneer in offshore drilling and its willingness to spend whatever money it takes to do a job.
The company paid $2.1 billion for its oil and gas leases off Alaska's coast in 2007, in a region of the ocean estimated to hold nearly as much oil as Alaska's North Slope oil fields.
But in the past couple of years, Shell's efforts to drill in those areas have been rife with setbacks due to opposition from many North Slope community leaders and environmentalists who doubt the company's ability to clean up oil spills in Arctic waters and worry about increased industrial activity hurting marine mammals.
The Gulf oil spill gushing from a BP exploration well is creating new uncertainty for Shell, which had been confident its project would survive the few remaining legal challenges from villages and environmentalists this spring. One of those legal challenges was denied by a federal court panel Monday.
If federal regulators give Shell the green light, the company plans to begin drilling in the Beaufort in July. The company's main spill response vessel for the project, the Nanuq, is already on its way to Alaska.
But, "If (the Department of the Interior) doesn't think this is the right thing to do, I would first of all disagree. I think we have a very responsible program," said Peter Slaiby, Shell's vice president for Alaska operations.
In trying to alleviate concerns that have arisen from the Gulf oil leak, Shell is looking to bolster protections for some of the systems that failed underwater at the Deepwater Horizon rig.
For example, steel blades routinely used by the offshore oil and gas industry as a last resort to cut a drill pipe and seal off an oil leak did not work at the Gulf well.
Les Skinner, Shell's senior wells engineer for the Alaska project, said the company has already successfully tested the blades that would cut the drill pipe in the Beaufort and Chukchi seas in an emergency. But to address the fresh safety concerns, Shell is now considering a second test in Alaska waters, he said.
REASSURANCES
At the same time it is bolstering its spill response plans, Shell is trying to convince the news media, the Alaska public and regulators that the wells it plans to drill in Alaska this summer are not as risky as the one that blew in the Gulf of Mexico because they are in shallower water and do not require as complex technology.
Still, the company's critics point out that many offshore wells located in shallow waters have had blowouts too.
A research paper published by MMS three years ago said that between 1992 and 2006, most blowouts in U.S. waters happened at depths of less than 500 feet. The paper noted, however, that the vast majority of offshore wells are at those depths.
The same was true in the previous decade, the paper said. The good news -- at the time -- was the rate of blowouts had decreased significantly and the environmental impacts were negligible, the paper's authors said.
Starting next week, Shell executives will visit with some of the company's biggest critics who live in Alaska's North Slope villages. There, some local governments and Native organizations are vehemently opposed to Shell's plan to drill in the Beaufort and Chukchi seas.
Shell officials said they plan to visit Point Lay, Point Hope, Kaktovik, Wainwright and Barrow.
"Look, these are going to be tough meetings. We will take the time to talk to everybody," Slaiby said.
Find Elizabeth Bluemink online at adn.com/contact/ebluemink or call 257-4317.
Hurdles remaining before Shell can drill this year
• Chukchi and Beaufort air permits must be finalized -- they're before the EPA Environmental Appeals Board.
• The U.S. Interior Department must finalize the Revised Five-Year Plan, affirming the Chukchi leases, and issue a permit to drill -- the permit was put on hold for further review after BP's Gulf of Mexico spill.
• The U.S. Fish & Wildlife service must issue marine mammal "letters of authorization" regarding polar bears and walruses.
• The National Marine Fisheries Service must issue marine mammal "incidental harassment authorization" regarding whales and seals. Source: Shell Oil
By ELIZABETH BLUEMINK
ebluemink@adn.com