The United States Coast Guard didn't mince words in its report of the grounding of Shell's drilling rig, the Kulluk, in December 2012. The Coast Guard found Shell failed both in preparation and operations, and concluded that the company decided to move the vessel despite forecasts of worsening weather in part to avoid a state property tax obligation.
None of this took place in the Arctic, where Shell did limited drilling program without incident in the summer of 2012.
All of this gives evidence that Shell is not fully prepared for Arctic operations.
A telling comment came from Rear Adm. Joseph A. Servidio, the Coast Guard's assistant commander for prevention policy. Servidio said the most significant factor was the failure to assess and manage the extreme risks of the Gulf of Alaska.
That failure gives Alaskans little faith that Shell has done an adequate job of assessing and managing risks in the Arctic. The risks and challenges are different. But the point is not the location; the point is the performance. The Coast Guard found failures across the board, from corporate decisions to responses on the deck of the towing vessel. Even before the Kulluk grounding, the Department of the Interior limited Shell's 2012 drilling program due to the failure of its containment barge, the Arctic Challenger, in calm seas testing.
Shell postponed any attempt at Arctic drilling off Alaska for this year long before the Coast Guard issued its report on the Kulluk, and it's CEO said the company is reassessing how to proceed with its Arctic leases.
Interior's attitude toward the exploration of Shell's leases had been all-ahead slow with a promise of a close and constant watch. That was wise. Several years ago Shell executives Marvin Odum and Pete Slaiby promised a methodical, careful approach to Arctic drilling, and said their biggest worry was complacency.
The Coast Guard said complacency might have been a factor in ignored alarms on the towing vessel Aiviq during the Kulluk incident. But it's clear complacency isn't the only problem.
All-ahead slow -- with unblinking oversight -- still makes sense in the long run for Arctic oil and gas exploration. But Shell and any other operators need to make clear that they have both learned and applied the hard-earned lessons of the Kulluk grounding.
Until then, stop engines is the right course.
BOTTOM LINE: Coast Guard's Kulluk report provides reason to stop and reassess Arctic operations.