UPDATE 6-Alaska oil rig reaches safe harbor after week on rocks

Mon Jan 7, 2013 11:18pm EST

* Salvage teams found no signs of breaches to fuel tanks

* U.S. Coast Guard: more work to do on salvage operation

* Operation involved more than 630 people, cost still unknown

By Yereth Rosen

ANCHORAGE, Alaska, Jan 7 (Reuters) - A Shell oil drilling rig that ran aground last week reached a safe harbor on Monday, where it will be examined to assess its seaworthiness after a week on the rocks near an Alaskan island.

Stormy weather had wrestled the Kulluk from towing ships a week ago, and tossed it to the shore of Sitkalidak Island. On Sunday night, it was refloated ahead of the 30-mile (48 km) tow, before dropping anchor just past noon on Monday in Kiliuda Bay, which was previously designated a refuge for disabled vessels.

The fortunes of the saucer-shaped drillship, which worked in the Beaufort Sea late last year, face particular scrutiny because it was a major part of Royal Dutch Shell's controversial and error-prone 2012 Arctic drilling program.

Shell said it had not yet been determined whether the Kulluk will be fixed in Kiliuda Bay or somewhere else, and whether it could continue on for planned winter maintenance near Seattle.

The salvage teams had earlier found no signs of breaches to its fuel tanks and only one area where seawater leaked onboard.

"At this stage, it's too early to gauge any impact on our ongoing exploration plans, but with the Kulluk now safely recovered, we'll carry out a detailed assessment of the vessel to understand what those impacts might be," Marvin Odum, president of Shell's U.S. arm, said in a statement.

PARTNER IN TOW

The Kulluk went aground in a storm on Dec. 31 after the ship towing it, the Aiviq, lost power and its tow connection in the Kodiak archipelago, far from where it began its well in September and October.

On Monday, the Aiviq towed it to Kiliuda Bay even though an investigation into its failures is not yet complete.

Alaska environmentalist Rick Steiner questioned Shell's reliance on the Aiviq and said he believed the problems with the Kulluk and its other contracted drillship, Noble Corp's Discoverer, would preclude any drilling this year.

While Shell officials would not yet speculate on the upcoming Arctic drilling season, the response team will for now be relieved to have the Kulluk in safer waters.

"I think everybody on site and at the command center was overjoyed, yelling and screaming and happy," said Steve Russell of the Alaska Department of Environmental Conservation, the state's response coordinator.

Coast Guard Captain Paul Mehler recognized it as a major milestone, but stressed there was still a lot of work to do. "We are not letting our guard down," he said.

Prior to the Kulluk accident, Shell's main problem in Alaska was the Discoverer, which had been assigned to Chukchi Sea work but failed to meet federal air standards, prompting Shell in June to ask the Environmental Protection Agency for a permit with looser limits for air pollution.

In September, the ship dragged its anchor in the Aleutian port of Dutch Harbor and nearly grounded on the beach there.

After drilling stopped, the Discoverer was cited by the Coast Guard for safety and environmental-systems deficiencies, which Shell and Noble vowed to fix before this summer's season.

And another ship deemed necessary for drilling was so beset with problems that it never even made it to Alaska in 2012. The Arctic Challenger, an oil-containment barge built specifically for Shell's Arctic drilling, failed to win Coast Guard approval for seaworthiness in time to allow any drilling to oil-bearing depths. Shell was permitted to drill only "top-hole" wells, to depths of about 1,400 feet (430 meters) below the seafloor surface.

As for the Kulluk, as of Sunday more than 630 people were deployed in response, along with a large fleet of vessels and aircraft, according to the incident command team. Shell will be paying for it all, though the cost to date is unknown.

"We undertake significant planning and preparation in an effort to ensure these types of incidents do not occur," Odum said. "We're very sorry it did."