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Shell ignored trip's risks, Coast Guard says

April 11th, 2014 | Carey Restino Print this article   Email this article  

After months of review, the U.S. Coast Guard investigation into the grounding of the Royal Dutch Shell's offshore drilling unit, the Kulluk, on New Year's Eve of 2012 found that those involved ignored the obvious risks of pulling the conical-shaped vessel through Alaska waters in the middle of winter.

In some cases, the report said, the crews of the Kulluk and 324-foot tug Aiviq simply showed poor judgment, but the report also highlighted a "significant number" of potential violations of law and regulations, including the failure to report an incident in which the Aiviq lost power weeks before it ran into trouble off Kodiak Island. Bridge and engineer room watch-keeping systems were also called into question as the report delved into the myriad of factors that led to the Aiviq loosing power and breaking tow with the Kulluk multiple times amid a fierce storm.

"I will ensure that these potential violations are thoroughly investigated by the Officer in Charge, Marine Inspection, Western Alaska, and as applicable, at other Coast Guard sectors," wrote Joseph Servido, rear admiral of the U.S. Coast Guard and assistant commandant for prevention policy. "If the potential violations of law and regulations noted in the report actually occurred, far greater levels of oversight will be required."

The Kulluk and its towing vessel Aiviq, manned and managed by Louisiana-based Edison Chouest, ran into trouble after leaving Unalaska in late December. While the Shell contractors contended the weather report looked favorable at the time, the crew was at least somewhat aware that the trip would be difficult.

"To be blunt I believe that this length of tow, at this time of year, in this location, with our current routing guarantees an ass kicking," the Aiviq Master, whose name was blacked out, told the tow master on the Kulluk in an email included in the report.

Money was a driving factor in the decision to pull anchor. Before the Kulluk and the Aiviq left on their ill-fated journey through the Gulf of Alaska, a spokesman for Shell told Bristol Bay Times-Dutch Harbor Fisherman reporter Jim Paulin that part of the reason they were leaving was to avoid state taxes that would be assessed on Jan. 1, 2013 if the rigs were still in Alaska. The company later denied that the taxes were a factor, but during the Coast Guard investigation, Operations Manager for Royal Dutch Shell testified that the potential tax expense was the driving factor in the move.

Once underway, bad weather moved in. The first sign of real trouble was when the Coast Guard was informed the Aiviq had broken tow with the Kulluk. Shortly afterward, the Aiviq itself was dead in the water, its engines inoperable. The Coast Guard responded, removing the 18 men aboard the Kulluk during a daring rescue in stormy seas, and was able to assist the Aiviq in getting its engines repaired. Once underway, the tug, along with the Crowley tug Alert, were able to re-establish tow lines with the drifting Kulluk. But the winter storm proved too strong. The Aiviq broke tow for the last time New Year's Eve, and the Alert, unable to keep the drill rig off the beach in 40-foot seas, was eventually ordered to release its line to protect the safety of the crew. The Kulluk did not spill any of the 150,000 gallons of fuel it had on board, but was deemed a loss by Shell due to water damage during its beaching.

The incident was a dramatic end to an already embarrassing first season of drilling in the controversial offshore leases in the Chukchi and Beaufort seas off Alaska's Arctic coastline. Numerous delays, equipment malfunctions and weather challenges had resulted in little progress by Shell, and the subsequent investigation into the Kulluk grounding caused other leaseholders to put a pause on their drilling plans. Litigation has since called into question the science that allowed the lease sales in the first place, further stalling any development of the region's oil and gas resources.

Coast Guard recommendations call for more oversight in Arctic

Coast Guard investigators want more standards to be established for towing in Arctic marine environments, and that includes for its own vessels. The report recommends evaluation of the towing equipment by Surface Forces Logistics Center to determine if it is adequate to prevent towing equipment failures.

The report also recommends that any corporation or entity intending to work in the Arctic marine environment "develop and maintain policies and guidance that addresses all aspects of marine operations including tow planning for operations across the globe, and establish additional criteria for operations that take place in areas of historic heavy weather, such as the Alaskan theatre."

Such plans should include towing routes, contingency plans including harbors of safe refuge, towing equipment sized and configured to meet the anticipated environmental forces and an acceptable third party assessment of operations prior to towages. The Coast Guard also called for establishing criteria for suitable towing vessels, taking into account the expected environmental conditions and the tow in question. In the case of the Kulluk, it's conical shape presented unique challenges under tow.

The Coast Guard called for any marine company intending to work in Arctic regions to re-evaluate its operating procedures.

However, a response from Rear Admiral Thomas Ostebo disagrees with the recommendations in some cases. Ostebo, who was the head of the 17th District from 2011 until he was recently reassigned to be the deputy commandant for mission support of the U.S. Coast Guard, responded that he believes there is "adequate flexibility in the current regulatory framework to monitor and provide sufficient controls to these operations." He noted that District 17 does not have "logistical control over most cutters that operate in the Arctic." Ostebo noted that the crew of the Aiviq and the Kulluk may have been unprepared for the conditions they faced.

"Mariners who have experience working offshore in the Gulf of Mexico do not necessarily possess the knowledge of the unique hazards that exist in the Gulf of Alaska," he wrote. "Edison Chouest Offshore or any marine company intending to work in Arctic regions should develop specific operating procedures, policies, guidelines, checklists, and job safety aids for any operations taking place in Alaska to provide crew with appropriate knowledge."

He said, however, that such policies should be industry implemented.

Bad fuel or water in tanks?

During testimony, Skoglund said bad fuel fouled the Aiviq's engines, and the tug's chief engineer, Carl Broekhuis testified that a fuel additive left slime in the fuel that was to blame, though he did not know what the additive was. Skoglund testified that water was not found in the fuel.

But the report contradicted that testimony, saying the cause of the Aiviq's engine failures was water that entered its fuel tanks.

The report documented how during its attempt to retrieve the tow line to the Kulluk on Dec. 27, the Aiviq took a significant roll. Sea swells at the time were in excess of 25 feet. The roll caused heavy equipment on deck to break free, and also flooded the "safe deck area" which ran down the sides of the main deck. These safe deck areas contained multiple vents for the fuel oil system.

After the incident, the fuel oil overflow tank was estimated to have contained nearly 1,832 gallons of water. There are contradictory reports in the engineering logs, with logs stating that day tanks were found to have no water in them, followed by other logs detecting traces of water in the tanks that should have been filtered for water.

The report concludes that the fuel injectors were fouled by water in the fuel, and goes further to say that analysis of those fuel injectors indicated that the corrosion found likely occurred over a period of time, not during the single incident in the Gulf of Alaska.

Evidence strongly suggests that the fuel overflow tank was full prior to the Aiviq's engineering casualty on Dec. 27, the report said.

"The circuit breaker for the fuel oil overflow tank alarm had been secured for unexplained reasons sometime after midnight on Dec. 26," the report noted. In addition, the overflow tank was not pumped down, which may have resulted in the contamination of the other tanks with sea water.

The chief engineer is one of several people on the Aiviq being investigated on criminal charges by the Coast Guard.

Tow plan questioned

In the section of the report detailing the tow plan development, the Coast Guard noted that the decision to move the Kulluk was made Dec. 7 after Shell considered several factors, including the logistics of completing repairs in Dutch Harbor, as well as the believed expense of tax laws that Shell estimated would be in the millions of dollars if the vessel remained in Alaska waters on Jan. 1, 2013. Tow plans were created following a meeting in Anchorage with several towing-related companies and Shell, Noble Drilling and Edison Chouest. The plans were then forwarded to reviewers for comment, however, the operations manager, who normally was designated as the final approver, was on holiday leave. Instead, a Shell employee whose identity was blacked out in the report approved the plan.

He had been employed with Shell for six months, had never reviewed a tow plan within shell, had not participated in any of the planning meetings, and had not received any training in tow planning or review. The tow plan was not forwarded to any other federal or state entities for review or approval. The investigation could not locate any federal or state requirements to review or approve such plans. The report said, however, that the Coast Guard was aware that the Kulluk would get underway in late December, and knew its general route, departure timeframe and manning levels.

The report said safe havens and anchorages were identified, but no specific guidance was provided with respect to when they should be used.

Aiviq had previous

problems towing Kulluk

The Aiviq's problems towing the Kulluk started months before its trouble in the gulf, the Coast Guard report noted, but no reports were made of the incidents. Between Aug. 30 and Sept. 1, the Aiviq encountered a storm on its way to the Beaufort Sea, taking on significant amounts of water on its back deck.

Water entered the safe decks and winch room, causing damage to numerous systems including the daughter craft, safe deck heaters, vent blowers, cranes and fire main valve systems. The tug was listing 20 degrees at times due to water intrusion into interior spaces, the report said. A blackout and engine failure also took place on Nov. 10, both of which would have required a marine casualty report to the Coast Guard. The report determined that there is sufficient evidence that a violation of the law or regulation may have occurred for the reporting failure by Edison Chouest.

Several other crew members, including the chief engineer, the Aiviq master and the third mate are being investigated for negligence based on evidence in the report.

Learning lessons

In a statement, Shell said it was still reviewing the report and that it "appreciated the thorough investigation and will take any findings seriously."

"Already, we have implemented lessons learned from our internal review of our 2012 operations," the statement said. "Those improvements will be measured against the findings in the USCG report as well as recommendations from the U.S. Department of Interior."

Environmental groups quickly commended the report's findings, saying it confirmed what they have known all along.

"We cannot rely on Shell's assurances that, next time, it will do better," said Susan Murray, Oceana's deputy vice president for the Pacific. "Companies should be allowed into the Arctic Ocean if and only if they have proven that operations can be undertaken safely and without harming the health of the ecosystem. Good stewardship requires good decisions and the willingness to say 'no' to unwise proposals."

Since the beginning, Shell has taken heat over whether it is capable of operating in the harsh conditions of Arctic Alaska. The company has invested more than $5 billion in its Arctic operation, though so far it has been able to drill only the top portion of two wells, one in the Chukchi and one in the Beaufort Sea. Following the Kulluk grounding in 2012, Shell canceled both its 2013 and 2014 Arctic drilling seasons.

"The Coast Guard report shows that Shell was completely unprepared for the realities of operating in Alaska's harsh seas," said Rebecca Noblin, Alaska director for the Center for Biological Diversity. "But what's even more troubling is it shows Shell's willingness to subsume safety concerns to financial ones. This isn't just about making mistakes; it's about knowingly taking unnecessary risks to save a few dollars."

As of late last year, the Kulluk remained in Singapore undergoing repairs. In October, a Shell executive hinted that damage to the rig was so extensive that it might not come back into service.

The Alaska Dispatch contributed to this story.


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