Royal Dutch Shell Delays Arctic Oil & Nat Gas Exploration Until Summer

Royal Dutch Shell Delays Arctic Oil & Nat Gas Exploration Until Summer
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Royal Dutch Shell Plc (NYSE:RDS.A) (NYSE:RDS.B) said on Monday, it will temporarily abandon its oil drilling operations off the coast of Alaska until next year, after experiencing a several technical setbacks.

Royal Dutch Shell Delays Arctic Oil & Nat Gas Exploration Until Summer

The oil company’s Arctic Containment System successfully passed a series of tests, however, it failed during the final tests due to damage. The oil containment dome was designed to prevent an oil spill, in case an underwater blowout happens.

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Shell said it would repair the dome and fully assess its readiness. The company emphasized that it was disappointed because it did not meet its own stringent acceptance standards. In addition, Shell said, “We will not conduct any operation until we are satisfied that we are fully prepared to do it safely.”

A report from the Los Angeles Times cited that the damage occurred during the final testing, after several of the clump weights were placed approximately 160 feet below the surface, to mark the area of a theoretical oil spill, in order to check  if the oil containment aboard the Arctic Challenger barge could be lowered over it. Shell’s engineers launched a Remotely Operated Vehicle, a mini-submarine to set up equipment properly, such as the oil containment dome, to prevent the supposed “leak.”

One of the sources, who requested reporters not to disclose his identity, said when the testers went back, the weights were lost and they couldn’t find them. The source said, “They got some of the weights set to hold the dome, then one of the eight winches on the dome became inoperative. They attempted to discover what was wrong by using the ROV, and got it tangled in the anchor lines of the dome, and it sank into the silt.” Divers tried their best not to damage the anchor lines that control the dome during the recovery process, but they failed. Shell did not reveal the extent of the damage suffered by the oil containment dome.

According to Royal Dutch Shell Plc (NYSE:RDS.A) (NYSE:RDS.B), instead of drilling into the hydrocarbon zones, it will start drilling wells, also known as “top holes”, during the remaining time the season allows, in order to lay a strong foundation for its oil exploration in the Arctic. Shell plans to re-start its drilling operation by the summer of 2013.

Earlier this month, Royal Dutch Shell Plc (NYSE:RDS.A) (NYSE:RDS.B) started drilling in the Chukchi Sea, after receiving the approval of its preparatory drilling operations from Interior Secretary Ken Salazar. The company was forced to stop its operation, in order to move away from an approaching large ice floe. Shell plans to reposition and hopes to begin drilling during the next couple days.

The company is also scheduled to start its drilling operations in the Beaufort Sea immediately after the Inupiat Eskimo whaling season this week.

In a statement, Shell said, “This exploration program remains critically important to America’s energy needs, to the economy and jobs in Alaska, and to Shell.”

Royal Dutch Shell Plc (NYSE:RDS.A) (NYSE:RDS.B) spent $4.5 billion to obtain its licenses and preparations for its oil and natural gas exploration in the Chukchi Sea and Beaufort Sea. Federal Officials estimated that there are 26 billion barrels of oil and 130 trillion cubic feet of natural gas recoverable in both areas of the Arctic.

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