Rig accident shows need to pause Arctic drilling: Green groups

The conical drilling unit Kulluk sits aground 40 miles southwest of Kodiak City, Alaska

Handout / Reuters

The conical drilling unit Kulluk, owned by Royal Dutch/Shell, sits aground 40 miles (64 kms) southwest of Kodiak City, Alaska, on the shore of Sitkalidak Island in this U.S. Coast Guard handout photo taken January 2, 2013. The Kulluk ran aground on New Year's Eve in "near hurricane" conditions and dragged two vessels trying to control it more than 10 miles toward Sitkalidak Island before the crews cut it loose to save themselves, the U.S. Coast Guard said. REUTERS/U.S. Coast Guard/Petty Officer 1st Class Travis Marsh/Handout

By Ayesha Rascoe

updated 1/3/2013 3:04:51 PM ET

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WASHINGTON (Reuters) - Opponents of Royal Dutch Shell's ambitious Arctic oil drilling program has called on the Obama administration to put offshore drilling plans in the region on hold after the dramatic grounding this week of Shell's oil rig in Alaska.

The Natural Resources Defense Council and The Wilderness Society on Thursday said the accident involving Shell's Kulluk oil rig is new evidence that oil companies are not prepared to safely manage the extreme conditions of the Arctic.

The 30-year-old Kulluk rig ran aground on New Year's Eve in "near hurricane" conditions while it was being towed south for the winter.

"This string of mishaps by Shell makes it crystal clear that we are not ready to drill in the Arctic," Chuck Clusen, NRDC's director of Alaska projects, told reporters during a teleconference.

The green groups said they plan to send a letter to the Department of the Interior demanding that they stop issuing permits in the Arctic, and prevent drilling in the sensitive area until it is determined that the environment can be fully protected.

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 company has yet to complete a single well, giving up on plans to explore for oil last year after its required oil spill containment system was damaged during tests.

Officials from Shell were not immediately available to comment.

Even without government action, the grounding of the Kulluk could threaten Shell's 2013 drilling timetable because its oil-spill plans require a second rig to be available at all times in case a relief well needs to be drilled to kill a well.

The Noble-owned Discoverer is Shell's other Alaska rig. The Kulluk is also operated by Noble.

While Shell has made the most progress toward exploring Alaska's offshore for oil, ConocoPhillips also has significant holdings in the Chukchi Sea.

ConocoPhillips paid more than $500 million in 2008 for leases in the area and has said it plans to drill an exploration well in the Chukchi in 2014 or later.

Massachusetts Congressman Edward Markey, the top Democrat on the House Natural Resources committee, also voiced concerns about Shell's fitness to operate in the Arctic.

"This is just the most recent incident in Shell's attempt to drill offshore in the Arctic and it raises serious questions about the company's ability to conduct these operations safely and in a way that protects the environment," Markey, an outspoken critic of oil and gas companies, said in a letter to Shell.

Markey asked the company to provide him with any plans it has developed to deal with severe weather in the region and for information about how the company plans to prevent similar accidents in the future. (Reporting by Ayesha Rascoe; Editing by Maureen Bavdek)