Thursday, March 14, 2013

U.S. Department of the Interior Releases Review of Shell Oil 2012 Arctic Drilling Operations - The Press Conference - Updated

At 4:30 PM, Washington DC time Thursday, outgoing Secretary of the Interior, Ken Salazar and others, held a press conference to announce the release of their expedited 60-day review of Shell's 2012 Alaska Arctic drilling operations, which were plagued by a series of fiascos.  Along with Salazar, the following DOI officials participated:

• David J. Hayes, Deputy Secretary of the Interior 
• Tommy Beaudreau, Interior’s Principal Deputy Assistant Secretary for Land and Minerals Management and Director of Interior’s Bureau of Ocean Energy Management 
• James A. Watson, Director of Interior’s Bureau of Safety and Environmental Enforcement

Here's what DOI put out in their media advisory:
Salazar will be joined by Deputy Secretary David J. Hayes, who chairs the Interagency Working Group on Coordination of Domestic Energy Development and Permitting in Alaska; Principal Deputy Assistant Secretary for Land and Minerals Management and Bureau of Ocean Energy Management Director Tommy Beaudreau, who led the assessment; and James A. Watson, Director of the Bureau of Safety and Environmental Enforcement. In January, Secretary Salazar directed the high-level review of Shell’s 2012 offshore drilling program in the Beaufort and Chukchi Seas – including the company’s preparations for last year’s drilling season and its maritime and emergency response operations – to identify challenges and lessons learned.
I attended telephonically.

The following is the best I could do between trying to quote, and getting fair paraphrasing:

Salazar opened with a statement describing Obama's commitment to the development of offshore and Arctic regimes, both oil and natural gas.

"Under the president's leadership domestic oil production has grown every year .....  Oil imports have dropped to 45%, the lowest percentage since 1995.

"Last summer we allowed Shell to proceed with limited activity in Alaska's Arctic.  Because Shell wasn't able to meet safety requirements, they were only allowed to drill preliminary holes.  We and the USCG watched closely.

"We learned a lot, partially from Shell's mishaps.  On January 8th, I directed an assessment and review of Shell's 2012 activities."

 Salazar notes that Shell came to DOI, to announce their drilling suspension for 2013.

Salazar defers to Beaudreau's 60-day report. Introduces "Tommy":

B describes their "37-page report."  Participants were also USCG and Price Waterhouse.

B states "Shell also cooperated.  Meetings in Washington DC, Alaska and Washington state."

Also met with Alaska Native groups, environmentalists and other governmental agencies.


All phases of Arctic operations must be integrated and subject to strong operator management and government oversight. Operators must submit detailed descriptions of operations before,. during and after. Shell fell too short in terms of management and planning.  Serious violations of permits in terms of discharges and demands 3rd party involvement in management of oversight regime by Shell.

Seems to slam Shell for not using adequate local and professional knowledge.

Turns the mike over to Hayes:

The review confirmed the importance of interagency coordination between Federal agencies in offshore drilling. (I think he is glossing over the 2012 problems severely, as he praises how Fed agencies performed.) The report confirms the appropriateness of "Arctic-specific standards" for equipment, operations and management.

He all but praises Shell for their performance while actually drilling the lead holes in the Chukchi and Beaufort.

Turns over to Admiral Watson, USCG:

Blah, blah, blah, Shell OK, blah....

Questions from press: John Broder, NYT: What did you find out about government operational shortcomings? - B - We learned a lot, and know more from it.  Integration between Fed agencies "worked very well." I missed a couple of questioners, as I signed in to ask two questions.

Rachel d'Oro from CSM/AP: was oversight of contractor by Shell a big problem? - "Pervasive problem."

Aisha Rasko, Reuters:  on "submitting integrated plan for operations - how would these differ from plans already required to submit?"  B - "asking for Shell to come up with plan that goes beyond that, including detailed descriptions, schedules,. targets all through approach, operation and end of season."

John Ryan KUOW Radio:  Questions wisdom of even deploying Arctic Challenger, in light of the seas the Kulluk encountered?  Admiral - basically, avoids the question of AC's suitability.

Conference concluded. Didn't get to me.  My questions were:

1) Has the strengthened, modified containment dome for the Arctic Challenger been tested yet? 
2) What little we know about how badly the test of the AC's original dome went came zbout from disclosures from KUOW's FOIA.  Public Employees for Environmental Responsibility has submitted several FOIA requests on the containment dome testing that have now been answered.  Will the requests be answered soon?

Somewhat disappointed, but not at all surprised at the shallowness and brevity of the information provided at the conference.

When DOI has posted the report, I'll link to it here. Link to some previous fdl articles on Shell Arctic drilling 2012.

Update - 4:05 pm PDT: The Department of the Interior has released its assessment report.

Here is the link (pdf)

From the report (emphasis added):
This review has confirmed that Shell entered the drilling season not fully prepared in terms of fabricating and testing certain critical systems and establishing the scope of its operational plans. The lack of adequate preparation put pressure on Shell’s overall operations and timelines at the end of the drilling season. Indeed, because Shell was unable to get certified and then deploy its specialized Arctic Containment System (ACS) – which the Department of the Interior (DOI) required to be on site in the event of a loss of well control – the company was not allowed to drill into hydrocarbon-bearing zones. Shell’s failure to deploy the ACS system was due, in turn, to shortcomings in Shell’s management and oversight of key contractors. Likewise, additional problems encountered by Shell – including significant violations identified during United States Coast Guard’s (USCG) inspection of the Noble Discoverer drilling rig in Seward last November, the lost tow and grounding of the Kulluk rig near Kodiak Island in late December, and violations of air emission permits issued by the Environmental Protection Agency (EPA) – also indicate serious deficiencies in Shell’s management of contractors, as well as its oversight and execution of operations in the extreme and unpredictable conditions offshore of Alaska.


HarpboyAK said...

To me, the important thing is that Salazar said the most quotable statement by a government official in years: "Shell screwed up."

Direct. Understandable. No beating around the bush. Something that ordinary folks understand.

Do you think that the new Secretary would say that?

Philip Munger said...

"Do you think that the new Secretary would say that?"

Have no idea, HbAK, but I'm waiting to see how many heads roll at Alaska Shell. Curtis Smith should be terminated ASAP, for instance. In old Japan, Smith would have spilled his guts by now - literally.

Joe Blow said...

No, in old Japan, Curtis Smith would still be carrying someone's briefcase. He would not have become a spokesperson until he was much older.

As it is, Smith is nothing but a spokesman, a press flack, a public relations stooge, and firing him wouldn't mean squat. They'd just put another spokesman in his place and nothing would change other than spokesperson.

His position is literally irrelevant in regards to Shell's policy decisions, he's not making any policy decisions, firing him won't change who does make the decisions.

Calling for the firing of Smith with the expectation of an impact on Shell's policies, would be like calling for the firing of Ari Fleischer and expecting GWBush's madcap policies to suddenly change for the better.

No, in old Japan, if anyone was going to be spilling their guts it would have been someone actually responsible for the errors, the flunkies wouldn't have been expected to do so.