Shell feared disaster days before Alaska rig grounding: official

ANCHORAGE, Alaska Tue May 21, 2013 4:08am EDT

A Shell logo is seen at a petrol station in London January 31, 2013. REUTERS/Luke MacGregor

A Shell logo is seen at a petrol station in London January 31, 2013.

Credit: Reuters/Luke MacGregor

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ANCHORAGE, Alaska (Reuters) - Days before a Shell drillship went aground in the storm-tossed Gulf of Alaska, it was clear that towing failures could spell disaster for the vessel, the crew and the marine environment, a company official told a U.S. Coast Guard panel on Monday.

The Kulluk, having completed preliminary drilling on an exploration well in the Beaufort Sea, broke away from its tow lines, and support vessels attempting to regain control of the drillship developed their own engine and mechanical problems, Norman Custard, Royal Dutch Shell's Alaska emergency response leader, told the panel.

Custard said he began planning for a crew evacuation on December 27, four days before the Kulluk grounded off Kodiak Island.

"My first and foremost concern was those 18 people on board," Custard said in the opening day of the Coast Guard hearing into the grounding, which capped an Arctic drilling season so filled with setbacks that Shell delayed further operations until next year.

Crew members were eventually evacuated by a Coast Guard helicopter on December 29, he said.

Shell has spent at least $4.5 billion since 2005 acquiring offshore Arctic leases and preparing to explore in remote basins believed to hold vast oil riches. But the company has yet to complete an exploration well in either the Beaufort Sea, off northern Alaska, or the Chukchi, off the northwestern coast. Legal, environmental and marine woes have stalled its progress.

Shell still has no timeline for when it will resume drilling, after saying in February that it would not drill in 2013, said company spokesman Curtis Smith, who was at Monday's hearing.

The hearing, expected to last two weeks, will delve into the series of maritime mishaps that culminated in the Kulluk grounding, Coast Guard officials said. It is part of a formal marine-casualty investigation launched in January by Rear Admiral Thomas Ostebo, head of the Coast Guard in Alaska.

"This is not a criminal investigation. This is simply a fact-finding mission," said Coast Guard Petty Officer Kip Wadlow.

Other probes may result in civil or criminal charges. The Department of Justice is considering sanctions for violations that other agencies say occurred on both of Shell's Arctic drillships. A Department of Interior investigation of its entire Alaska drilling program has already led to recommendations for new and stricter Arctic-specific regulations.

Shell's second Alaska drillship, the Noble Discoverer, was cited by the Coast Guard and Environmental Protection Agency for numerous safety and environmental deficiencies. The two rigs are getting repaired in separate shipyards in Asia.

ConocoPhillips has shelved drilling plans for 2014 at its Chukchi leases. Statoil, which also has Chukchi leases, has yet to present a drilling plan to U.S. authorities.

The Coast Guard's Kulluk investigation is expected to take months to conclude, Petty Officer Wadlow said.

Other Shell officials will testify in coming days, as will officials from its contractors and other groups. The Department of Interior's Bureau of Safety and Environment Enforcement and the National Transportation Safety Board are also participating.

(Editing by Braden Reddall)

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