UPDATE 1-Shell's two offshore Alaska rigs headed to Asia for repairs

Tue Feb 12, 2013 12:21am EST

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By Yereth Rosen

ANCHORAGE, Alaska Feb 11 (Reuters) - Royal Dutch Shell Plc's two offshore rigs in Alaska will head to Asia for repairs and upgrades, the Anglo-Dutch oil company said on Monday, casting doubts on its plan to do any drilling off the state's coast this year.

The departures, expected within weeks, will draw a curtain on the rigs' accident-prone first year at work in the Arctic. Shell's multi-billion-dollar move into the environmentally sensitive U.S. waters - the first since the Macondo disaster of 2010 - is being watched closely by the industry.

Even before Shell's Kulluk drillship ran aground near Kodiak Island on Dec. 31 after escaping its tow lines, the 2012 drilling program was stalled by troubles with support vessels and regulatory scrutiny of the other rig, the Noble Discoverer.

After the Arctic drilling season closed at the end of October, a fire then broke out on the Discoverer.

There were even engine failures on the Aiviq, the specially designed ship pulling the Kulluk, before it lost its tow connection.

Shell has already spent $4.5 billion on its program to seek oil in the Chukchi and Beaufort seas, but the Kulluk incident combined with the many other challenges led the U.S. Department of Interior to launch a review of its program.

"It's time for Shell to re-evaluate whether it makes sense to continue pouring money into this complex and difficult drilling effort," Lois Epstein, Arctic program director for The Wilderness Society, said in a statement on Monday.

Shell said in a statement that no decision had been made yet about the 2013 Alaska offshore drilling program.

The company decided the Kulluk could get better services in Asia than at the Seattle-area shipyard where it was headed on its ill-fated crossing of the Gulf of Alaska.

"We haven't determined yet where in Asia," said Curtis Smith, Shell's spokesman in Alaska. "A number of shipyards in Asia have the drydock facilities and capacities to better execute these types of projects."

The Kulluk, anchored since Jan. 8 in Kiliuda Bay off the eastern side of Kodiak Island, sustained flooding damage, including damage to its generators, according to early assessments.

As for the Discoverer, owner Noble Corp will move it to a shipyard in South Korea, Shell said. The drillship, costing Shell $244,000 per day under its contract, has been docked for several weeks in Seward, Alaska, where inspections by the U.S. Coast Guard revealed deficiencies in environmental and safety systems.

Shell expects the two ships to depart Alaska in the next three to six weeks, starting a journey that will take another two to four weeks, Smith said.

"In the meantime, we are exploring a range of options for exploration work offshore Alaska in 2013," the company said in a statement. "Shell remains committed to safely exploring for Alaska's offshore energy resources."

Smith said he could not comment beyond that on plans for drilling in 2013.

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A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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