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Coast Guard report shows Shell was underprepared for ill-fated tow across Gulf of Alaska

Suzanna Caldwell
Capt. Paul Mehler III, left, commander of Coast Guard Sector Anchorage, testifies on Wednesday, May 29, 2013, during the formal marine casualty investigation hearing into Shell's conical drilling rig Kulluk grounding on Sitkalidak Island, Alaska, during severe weather on Dec. 31, 2012. Coast Guard lawyer Cmdr. William Dwyer listens at right. Bill Roth / Anchorage Daily News / Pool Photographer

A Coast Guard report released Thursday shows that while a series of events ultimately led to the grounding of a drilling rig designed to drill in the Arctic, an “inadequate assessment and management of risks” was the biggest cause of the Kulluk grounding.

In a letter outlining the report from U.S. Coast Guard Rear Admiral Joseph A. Servido, the Coast Guard explained its findings related to the New Year's Eve 2012 grounding of the Kulluk, a conical drilling unit and then one of the centerpieces of Royal Dutch Shell's Arctic drilling operation.

The report comprises the final findings about the incident by the Coast Guard Investigations National Center of Expertise in Louisiana. It comes 10 months after investigators met in Anchorage for more than a week last summer to interview stakeholders in the response effort.

The findings in the 152-page report conclude that while bad weather in the Gulf of Alaska was the primary cause of the grounding, “ineffective” risk management and application of towing measures from Shell and Edison Chouest contributed to the grounding.

“(I'm) most troubled by the significant number and nature of the potential violations of law and regulations identified in the Enforcement section of the investigative report,” Servido wrote, “including the failure to report marine casualties, failure to report safety-related vessel issues and improper/illegal bridge and engine room watch-keeping systems.”

The report notes that there were at least two incidents on the Aiviq that warranted Coast Guard notification prior to the ship's departure from Dutch Harbor in mid-December. One of those incidents included a power “blackout” and engine failure on the ship as it tugged the Kulluk from exploration work in the Beaufort Sea in fall 2012.

The report concludes that civil penalties could be leveled against Edison Chouest, though it was unclear Thursday what those could be, according to Coast Guard headquarters spokesperson Lisa Novak. That decision will be left to the captain of the port in the Coast Guard's Anchorage sector.

Detailed findings

The report lays out in specific detail everything that led to grounding of the drilling rig, which was heading to Everett, Wash., where offseason repairs could be completed ahead of the planned 2013 Arctic drilling season. The move was also timed to avoid a tax liability that would have left Shell on the hook for millions of dollars had the Kulluk remained in Alaska waters.

But things went awry just days after the rig left Dutch Harbor when poor weather -- sea swells 20 feet high and winds blowing at up to 35 knots -- moved into the area in which the Kulluk was traveling.

While weather had been considered favorable heading into the trip, that changed quickly and was even acknowledged by the Aiviq's master, whose name was redacted in the report, but who was reported during the casualty hearing last summer to be Capt. Jon Skoglund.

“To be blunt I believe that this length of tow, at this time of year, in this location, with our current routing guarantees an ass kicking,” the Aiviq captain told the tow master in an email included in the report.

The report goes into detail on the first failure of the tow shackle, on to the numerous attachments and reattachments of tow lines that all ultimately failed, leading to the decision release the Kulluk just hours before the end of the New Year in 2012. It eventually washed ashore on Sitkalidak Island near Kodiak. There was no loss of life or chemical spill.

Even still, the report calls into question the adequacy of the plans and operators of the Kulluk tow operation. In specific it noted that while the tow crew of the Aiviq was an experienced crew, they were inexperienced in Alaska wintertime waters.

“This specific lack of experience was displayed during the towing operations on Dec. 27, where the crew took ineffective action to reduce extremes in towline tension during a period of nearly six hours prior to shackle failure,” the report said.

The report also raised doubts over the adequacy of Shell's tow plan.

“The plan was not adequately reviewed, did not address the role of the Aiviq Master and lacked the proper contingency planning,” it said.

Learning lessons

In a statement, Shell said it was still reviewing the report and that it “appreciated the thorough investigation and will take any findings seriously.”

“Already, we have implemented lessons learned from our internal review of our 2012 operations,” the statement said. “Those improvements will be measured against the findings in the USCG report as well as recommendations from the U.S. Department of Interior.”

Environmental groups quickly commended the report's findings, saying it confirmed what they have known all along.

“We cannot rely on Shell’s assurances that, next time, it will do better,” said Susan Murray, Oceana's deputy vice president for the Pacific. “Companies should be allowed into the Arctic Ocean if and only if they have proven that operations can be undertaken safely and without harming the health of the ecosystem. Good stewardship requires good decisions and the willingness to say ‘no’ to unwise proposals.”

Since the beginning, Shell has taken heat over whether it is capable of operating in the harsh conditions of Arctic Alaska. The company has invested more than $5 billion in its Arctic operation, though so far it has been able to drill only the top portion of two wells, one in the Chukchi and one in the Beaufort Sea. Following the Kulluk grounding in 2012, Shell canceled both its 2013 and 2014 Arctic drilling seasons.

“The Coast Guard report shows that Shell was completely unprepared for the realities of operating in Alaska’s harsh seas,” said Rebecca Noblin, Alaska director for the Center for Biological Diversity. “But what’s even more troubling is it shows Shell’s willingness to subsume safety concerns to financial ones. This isn’t just about making mistakes; it’s about knowingly taking unnecessary risks to save a few dollars.”

As of late last year, the Kulluk remained in Singapore undergoing repairs. In October, a Shell executive hinted that damage to the rig was so extensive that it might not come back into service.