* Review follows grounding of Shell rig in Alaska
* Any delays could threaten Shell's 2013 plans
* Green groups want a halt to permitting
By Ayesha Rascoe
WASHINGTON, Jan 8 The U.S. Interior Department
will review Royal Dutch Shell's 2012 Arctic oil
drilling program to assess the challenges the oil company faced
and to help guide future permitting in the region.
The announcement on Tuesday follows the grounding of one of
Shell's rigs off the coast of Alaska last week, the latest
mishap the company has encountered as it undertakes an ambitious
Arctic exploration effort.
"Exploration allows us to better comprehend the true scope
of our resources in the Arctic ... but we also recognize that
the unique challenges posed by the Arctic environment demand an
even higher level of scrutiny," Interior Secretary Ken Salazar
said in a statement.
Any changes in permitting requirements or delays due to the
review could threaten Shell's drilling plans for 2013. The
company faces a limited window during the summer when weather
conditions and regulators will allow drilling.
Interior said it hopes to complete its "high-level"
assessment within 60 days.
Also on Tuesday, the U.S. Coast Guard in Alaska ordered a
special investigation into the causes of last week's grounding
of Shell's Kulluk drill ship, a probe that the Coast Guard said
was expected to take several months.
Known as a formal marine casualty investigation, it is
convened when a shipping accident has considerable regional
significance or may indicate vessel class problems, or if such
an investigation is the best way to assess technical issues that
may have contributed to the problem, the Coast Guard said.
Shell has spent $4.5 billion since 2005 to develop the
Arctic's vast oil reserves, but the company has faced intense
opposition from environmentalists and native groups, as well as
regulatory and technical hurdles.
The oil company made some strides last year, actually
beginning preparatory drilling in the Chukchi and Beaufort seas.
But the work was far short of completing up to three wells in
the Chukchi and up to two in the Beaufort, as Shell planned.
Instead, its 2012 drilling season was beset by delays due to
lingering ice in the water and problems with getting a mandatory
oil spill containment vessel certified by the Coast Guard.
Shell welcomed the department's review, conceding that it
had experienced some challenges.
"We have already been in dialogue with the DOI on lessons
learned from this season, and a high level review will help
strengthen our Alaska exploration program going forward," Shell
spokeswoman Kelly op de Weegh said in a statement.
Interior said it would examine the issues with Shell's
containment vessel, as well as issues with Shell's two Arctic
drilling rigs, the Kulluk and Noble Corp's Discoverer,
which Shell has under contract there.
It was the Kulluk that broke away from tow boats and ran
aground on New Year's Eve in what were described as near
hurricane conditions before being towed to safety on Monday.
U.S. Senator Mark Begich, an Alaska Democrat and strong
supporter of offshore Arctic drilling, called on Tuesday for a
hearing to examine the Kulluk situation.
"While this incident notably involves marine transportation
and not oil exploration or drilling, we must quickly answer the
many questions surrounding the Kulluk grounding and improve any
regulatory or operational standards as needed to ensure this
type of maritime accident does not occur again," Begich said in
a letter to Coast Guard Commandant Admiral Robert Papp and to
Environmentalists see the Kulluk accident as new evidence
that oil companies are not ready for Arctic drilling, calling on
the government to put permitting there on hold.
One group calling for a pause in permitting, conservation
group Oceana, said Interior's review was a step in the right
direction, but it must be "more than a paper exercise."
"The Department of the Interior, after all, is complicit in
Shell's failures because it granted the approvals that allowed
Shell to operate," said Michael LeVine, Pacific senior counsel
at the ocean conservation group.
As for the Kulluk itself, the unified command for the
accident response said it remained anchored in its bay of refuge
and still showed no signs of leaks or spills. Later on Tuesday,
remote operated vehicles are expected to examine the hull and
divers will be called in if necessary, the statement said.