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Critics Say Grounding Shows Arctic Drilling Danger

Stocks in this article: BPRDS.B

The state of Alaska has been an enthusiastic supporter of Arctic offshore drilling. More than 90 percent of its general fund revenue comes from oil earnings. However, the trans-Alaska pipeline has been running at less than one-third capacity as reserves diminish in North Slope fields. State officials see Arctic offshore drilling as a way to replenish the trans-Alaska pipeline while keeping the state economy vital.

In September, two Shell ships sent drill bits into the U.S. Arctic Ocean floor for the first time in more than two decades. They created top holes and initial drilling for two exploratory wells. Drilling ended on the last day of October.

The grounding in the North Pacific is not a wellhead blowout in the Arctic, and not a drop of oil has been detected in the water. But environmental groups say it's a bad sign.

Drill rigs in Arctic waters could be affected by ice any time during the four-month open water season, said Heiman of the Pew Environment Group. The other threats â¿¿ near hurricane-force winds compounded by cold and darkness â¿¿ were seen in the grounding, she said.

"We know that in the Arctic and in the gulf it's not uncommon to have pretty high seas, and you have to take precautions," she said. "If you're going to dill in those types of conditions, or even move vessels in those conditions, you have to have strong, Arctic-specific gear and equipment and safety training. It has to be very vigorous, and I don't think we're there yet."

Shell was fortunate in some ways, she said, that the Kulluk experienced problems near Kodiak.

"Up in the Arctic, you are 1,000 miles away from any Coast Guard station and the kind of response they were able to deploy in Kodiak," she said. The Coast Guard the last few summers has staged equipment and personnel in the Arctic. That has meant a couple of helicopters and possibly a cutter, Heiman said. It in no way can be compared to the Gulf of Mexico and the resources available for BP's Deepwater Horizon disaster.

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