Shell Learned Some ‘Expensive Lessons’ in Arctic

Updated on

Royal Dutch Shell Plc learned “some very painful and expensive lessons about contractors” from its mishaps drilling in the Arctic in 2012, U.S. Interior Secretary Sally Jewell said.

Shell learned how to better manage companies it relies on for critical aspects of its offshore drilling programs, Jewell told reporters at the IHS CERAWeek conference in Houston on Monday. The U.S. government has “raised the bar” on safety in terms of offshore drilling in recent years, she said.

The Interior Department this month confirmed Shell’s exploration lease in Alaska, potentially clearing the way for the company to resume drilling that was halted after a stranded rig and legal challenges. Greenpeace activists boarded an oil rig in the Pacific Ocean, seeking to halt Arctic drilling.

A government review of Shell’s offshore drilling program in the Beaufort and Chukchi Seas released in March 2013 recommended Shell submit an integrated safety plan and undergo comprehensive third-party auditing of its management systems. The report also called for Arctic-specific practices and resource-sharing among companies. Weaknesses in contractor oversight “led to many of the problems that the company experienced,” the report concluded.

(Corrects story published April 20 to clarify in third paragraph that company isn’t yet cleared to resume Arctic drilling.)
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