Is Portland All That Stands Between Shell and Arctic Oil?

by Tim Donaghy

July 23, 2015

Does Shell have the final permits it needs to drill in the Arctic? Why is one of its crucial pieces of equipment in Portland, Oregon? Didn't we go through this same thing with Shell in 2012? We answer your questions on this week's #ShellNo news.

Shell Arctic Drilling Action in Helsinki

Greenpeace activists board the ice breakers Fennica and Nordica in Helsinki in 2012. The activists protest against Shell's Arctic oil drilling plans by dropping banners reading "Save the Arctic. Stop Shell".

© Matti Snellman / Greenpeace

Shell Oil received permits this week to commence drilling in the Chukchi Sea, but thanks to Shell’s own screw-ups there is still a chance for President Obama to put a stop to misguided Arctic oil drilling.

Shell’s damaged icebreaker, the Fennica, is on its way to Portland, Oregon, where workers will repair a meter-long gash in its hull that it suffered while attempting to travel north. Because the Fennica carries a mission-critical piece of safety equipment, Shell cannot drill into oil-bearing rock formations until it is fixed and returns to the Arctic. What’s more, a rule protecting the Pacific walrus has also forced Shell to scale back its Arctic drilling plans.

Q: Shell received its final drilling permits this week, right?

Not quite. The Obama administration gave Shell permits to drill at two sites in the Chukchi Sea, but the permits are restricted to preparatory work and drilling shallow “top holes” that do not go deep enough to reach the layers of rock that contain oil and gas. Once the Fennica returns to the Chukchi Sea, Shell will have to submit an application to modify those permits in order to drill into hydrocarbon zones that might contain oil.

There is still an opportunity for President Obama to say “Shell No” to Arctic drilling!

Q: What is the Fennica and why does it need to be on site?

The Fennica is one of Shell’s two primary icebreakers, whose role is to protect the drilling rigs from encroaching hazardous ice floes. But more importantly, the Fennica is carrying the capping stack, a mission-critical piece of safety equipment. In the event of a well blowout, like the one that caused the Deepwater Horizon disaster in 2010, the capping stack is designed to fit on top of a leaking well and seal it.

The government requires the capping stack to be present near the drilling rigs and ready to be deployed within 24 hours of a blowout. As a result, Shell can’t drill for oil until the stack returns.

Q: Didn’t something like this happen in 2012 also?

Yep. In 2012, during Shell’s earlier attempt at Arctic drilling, the failure of a different piece of safety equipment prevented Shell from drilling into oil-bearing zones and it finished the season drilling only top holes. During testing off the coast of Washington State, Shell’s containment dome failed and was “crushed like a beer can.” The containment dome is designed to siphon leaking oil and pipe it to a tanker on the surface. It will be deployed if the capping stack is unable to seal the well.

This year, the government has approved both the capping stack and the containment dome—although during one test one of Shell’s tugboats dragged its anchor and nearly crashed into the barge holding the containment dome.

Q: What exactly happened to the Fennica?

The Fennica was attempting to leave Dutch Harbor, Alaska and head north to the drill sites in the Chukchi Sea. On its way, it struck a shallow, underwater shoal that gouged a hole in its hull that was 39 inches long and one inch wide.

The gash was not able to be fully repaired in Dutch Harbor, so the ship is being sent to an industrial shipyard in Portland. Although the shoal was located in an area that had not been adequately charted, Fennica appeared to take a shorter path through a region with recorded depths only slightly deeper than its stated draft. This indicates that Shell was taking unnecessary risks in a region that tolerates few mistakes.

Q: Sounds like Shell has had a lot of problems with boats.

You’re telling me! In 2012, both of Shell’s rigs experienced serious problems. The Noble Discoverer dragged its anchor in Dutch Harbor and nearly beached itself. Shell’s other rig, the Kulluk, slipped its tow-line during a fierce storm and ran aground on an Alaskan island. The damage was so significant that it was later scrapped. Shell’s contractor, Noble, pleaded guilty to eight felony violations and paid a $12 million fine relating to safety and environmental violations on the Discoverer. Shell claims to have learned from the lessons of 2012, but its recent track record says not.

Q: Doesn’t Shell also need the icebreaker there to—you know—break ice?

Shell’s approved Exploration Plan calls for two primary icebreakers (the Nordica and the Fennica) working at the drill sites, and discusses situations in which both ships would be necessary to protect the drilling rigs against hazardous ice.

Greenpeace and other environmental groups have argued that it goes against the Exploration Plan to allow any drilling while the Fennica is being repaired, but this week government found that Shell had sufficient ice management resources in place (including two secondary icebreakers) to allow for top hole drilling.

Q: OK, so what’s the thing about the walruses?

Perhaps the biggest blow to Shell’s plans is a 2013 Fish & Wildlife Service rule that prevents simultaneous drilling by any two rigs within 15 miles of each other to prevent disturbing and harassing the Pacific walruses who use the area near the drill sites to forage for food. Shell had been hoping to drill two wells this summer using the Discoverer and Polar Pioneer simultaneously, but its drill sites are only nine miles apart. As a result, this rule has forced the company to drill only one well at a time and the permits issued yesterday made it clear it can’t even switch back and forth between the two wells. Shell has to drill one well and seal it before moving on to the other.

Shell knew about the walrus rule when it was proposed but went ahead and submitted an Exploration Plan that called for simultaneous drilling anyway. When the government looked at Shell’s Plan, it explicitly decided not to analyze a “one well” scenario because stretching the drilling out over more seasons would actually increase the harm to wildlife and the environment. For this reason, Greenpeace and other environmental groups have called for the entire Exploration Plan to be rescinded, yet the government has chosen to allow Shell to go forward despite the lack of relevant analysis.

Shell has already invested more than $7 billion in the Arctic, but through its own mistakes, is yet to find a drop of oil. Pressure is growing from investors to justify such an expensive and risky proposition. The drilling window in the Arctic is brief and Shell needs to finish drilling activities by September 28. The clock is ticking and thanks to its missing icebreaker and the walrus drilling restrictions, it’s not clear the company can accomplish its goals in the time remaining.

As the Fennica heads south, many are wondering if Portland will be the next Seattle? In the meantime, tell President Obama to stop Arctic oil drilling before it starts.

Tim Donaghy

By Tim Donaghy

Tim Donaghy is a Senior Research Specialist with Greenpeace USA. He writes frequently about climate change, offshore oil drilling, energy production, and the Arctic.

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