Bloomberg News

Shell’s Alaska Plan Doesn’t Eliminate Spill Risks, GAO Says

March 30, 2012

Royal Dutch Shell Plc (RDSA)’s plan for oil drilling off Alaska’s north coast fails to deal with some risks linked to operating in the remote region, the U.S. Government Accountability Office said.

The federal watchdog’s comment strengthens calls from environmental groups, such as the Natural Resources Defense Council and Alaskan native people, that have been urging President Barack Obama’s administration to delay Arctic oil exploration.

Ice that floats on the surface or scrapes the seafloor may hinder the response to a spill late in the drilling period, which runs from July 15 through Oct. 31. A lack of personnel and equipment near a remote drilling site may slow containment and collection of spilled oil, the agency said in a report released today by the House Energy and Commerce Committee.

“Shell representatives told us that the company plans to have two concurrent drilling operations capable of providing mutual assistance,” the watchdog said. “But there are few additional resources available in the region to respond in the event that Shell’s capabilities are insufficient.”

While Shell won the approval of its oil-spill response plans, the Hague-based company has yet to obtain Interior Department permits to drill any wells in the Arctic seas that may hold as much as 26.6 billion barrels of oil.

Beaufort, Chukchi

Shell, preparing to drill in the region for five years after spending about $4 billion on Beaufort Sea and Chukchi Sea leases, plans to use equipment designed specifically for icy Arctic conditions.

“Our oil-spill response plan is second to none in the industry and we are proud of that,” Curtis Smith, a Shell spokesman, said today in an e-mail. “The recent approval of our Beaufort and Chukchi sea oil-spill response plans reinforces that our approach to Arctic exploration is aligned with the high standards the Department of Interior and the public expects.”

The GAO report is “one more powerful voice” in favor of delaying Arctic drilling, Chuck Clusen, director of national parks and Alaska projects at the New York-based Natural Resources Defense Council, said today in a phone interview. The NRDC joined Alaskan natives and other environmental groups in challenging the sale that gave Shell access to Arctic leases.

The Interior Department “conducted exhaustive reviews of the plans,” Nicholas Pardi, a spokesman, said today in an e- mail. The agency “continues to hold the operators accountable with additional exercises, reviews and inspections to ensure that all personnel and equipment are positioned and ready.”

To contact the reporters on this story: Katarzyna Klimasinska in Washington at kklimasinska@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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