Shell's Arctic Oil Rig Runs Aground

Brian Hicks

Written By Brian Hicks

Posted January 3, 2013

There is some risk that 2013 could start out with a Royal Dutch Shell (LON: RDSA) oil spill.

Currently, one of the company’s two Arctic oil rigs, the Kulluk, is beached on an island in the Gulf of Alaska. It had broken free from its tow ship in inclement weather and ran aground on Monday night.

The Coast Guard is already putting together a serious effort to stave off an oil spill, which could see more than 150,000 gallons of diesel fuel and other lubricants spread out over the shore.

So far, it seems the Kulluk is both upright and stable, which is cause for relief.

From the New York Times:

“The results are showing us that the Kulluk is sound,” [the federal on-scene coordinator, Captain Paul] Mehler said. “No sign of breach of hull, no sign of release of any product.” He said the response team hoped to get salvage experts aboard the ship to get a better picture of damage.

All 18 crew members had been evacuated via helicopter on Saturday, which is when the rig went adrift in the face of stormy winds and choppy seas.

While the situation sounds reasonably under control, it also marks the latest in repeated challenges to Shell’s hopes for oil prospecting in the Beaufort and Chuckchi Seas.

Last September, equipment concerns, unforeseen levels of ice, and regulatory issues caused Shell to put on hold its plans for Alaskan drilling. And Shell’s Noble Discoverer, an exploratory ship, encountered various problems over the past year.

Shell had recently overhauled the Kulluk for almost $300 million, and any substantial damage will not only hit the company financially but also put it in trouble when trying to obtain future government permits to continue drilling in July.

Currently, the Kulluk is on the southeastern coast of Sitkalidak Island, across the strait from Kodiak Island. Nearby town Old Harbor has a population of roughly 200 and harbors an endangered variety of sea lion.

Critics have not been kind to Shell in view of the seemingly endless instances of regulatory oversights or lapses. We’ll have to wait and see if Shell can make a successful Arctic oil effort, or if it will consider shelving plans altogether.

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