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Shell won't reach Arctic Alaska oil this year

Ben Anderson
Deck of Arctic Challenger, which was occupied by Caspian terns and covered in bird feces while docked in 2007.
Nancy Frost / California DFG
The Arctic Challenger, a barge Royal Dutch Shell is renovating to use in Arctic drilling operations.
Courtesy Shell Oil
The Arctic Challenger, a barge Royal Dutch Shell is renovating to use in Arctic drilling operations.
Courtesy Shell Oil
The Arctic Challenger was occupied by Caspian terns while docked in Southern California in 2007.
John Potter / California DFG

It was a tough year for Royal Dutch Shell to kick off its multibillion-dollar gambit on drilling for offshore oil in the Arctic. First, stubborn sea ice in waters off Western Alaska -- even as the rest of the Arctic saw record low sea-ice -- shortened the drilling window. Now, persistent troubles with a specially-designed barge intended to contain any spills have ended any prospect that hydrocarbons in the offshore U.S. Arctic might be reached this year.

The most recent problem arose last week when part of that oil containment barge, the Arctic Challenger, was damaged during tests in the Puget Sound off of Washington. The ship has been docked there for months awaiting Coast Guard certification.

According to Shell Alaska spokesman Curtis Smith, the ship had undergone five days of successful tests before a problem arose with the containment dome, intended to stem the flow of a potential underwater oil spill.

On hand for those tests were Shell, the Coast Guard, and the Bureau of Safety and Environmental Enforcement (BSEE), which reviews and approves oil spill response plans. Smith said that as soon as Shell included the Arctic Challenger in its submitted exploration plan, it has to work before the company can go ahead with drilling into hydrocarbon deposits.

With the recent setback, Smith said that the company is "recalibrating" drilling plans and deciding exactly how to proceed forward.

Adding to the problems is that the Arctic Challenger still hasn't received that certification from the Coast Guard, as certain safety and electrical systems continue to be tested. According to Coast Guard spokesman Michael Hvozda, the plan Monday night was to test the vessel's emergency lighting systems.

"Electrical systems, power systems, life saving equipment -- things you'd find on any other ship -- our priority is to make sure that those operate under the federal requirements," Hvozda said.

He said he wasn't sure what other systems still needed to be tested, but added that the Coast Guard was not on board the ship when the problem arose with the containment dome. After the Coast Guard has approved all the systems, it becomes an administrative task of certification, Hvozda said, and couldn't offer a timeline on when that might be completed.

The Arctic Challenger is a unique vessel with an interesting past -- including a period where it was home to about 350 birds -- and has been specially fitted for its role alongside Shell's other Arctic vessels. The ship is key to the company's drilling plans because much of the controversy about Arctic offshore oil development has swirled around the uncertainty of cleanup in the event of a spill.

Shell had previously announced that it would scale back its ambitions for 2012, drilling only two exploratory wells, instead of the five it initially proposed. Still, those two wells had the potential for reaching hydrocarbons. Now, the company will stick to drilling only top holes, which won't reach as far into the Arctic seabed. That work, however, would give the company a head start on drilling in the 2013 season.

Smith said that a previously requested extension to the 2012 drilling window likely wouldn't be necessary in light of the scaled back plans. That proposal, submitted to the U.S. Department of the Interior in late August, could have allowed Shell to drill longer depending on the prevalence and return of sea ice in the Chukchi. Given how the sea ice had impeded Shell's progress north in the early stages of the season, Smith said that Shell had remained optimistic that they might yet be able to reach hydrocarbon levels by the end of the year.

"We were hopeful, but I think it's fair to say we were fast losing our window to get into those hydrocarbons," he said. "At this point, we're going to continue to drill those top holes until Oct. 31."

It's not all a loss, though -- Smith estimated that drilling the top holes now and returning next year could shave off half of the total drilling time for the wells, meaning getting at those hydrocarbons next year may become an easier proposition.

Shell needs all the time it can get, too, especially in the Beaufort Sea, where the whaling season delays drilling as Shell waits for local subsistence whalers to complete their annual hunt.

That season may be nearing an end. On Monday, the northern coastal village of Kaktovik reported one whale already harvested and another injured, leaving one more possible catch under their quota. In the village of Nuiqsut, all four whales allotted to the community had been caught and brought in.

One of Shell's drilling rigs, the Noble Discoverer, was finally able to begin drilling in the Chukchi Sea on Sept. 9, but had to stop the next day as a precautionary measure as a large ice floe moved in. In the Beaufort, Shell plans to begin drilling as soon as the whaling season concludes.

Contact Ben Anderson at ben(at)alaskadispatch.com