The drilling rig Kulluk, which ran aground on Sitkalidak Island in January, will not return to Alaska in 2014, Royal Dutch Shell officials announced last week. It’s not even clear if the Kulluk will ever return to the 49th state, Shell chief financial officer Henry Simon told reporters.
"The Kulluk we do not expect, in fact we are not sure that we will necessarily bring the Kulluk back into operation," Simon said.
Shell is expected to unveil its 2014 Arctic drilling plans within the next few weeks, and those plans are not likely to include drilling in the Beaufort Sea north of Prudhoe Bay. Instead, Shell is expected to focus in the Chukchi Sea off Kotzebue and Alaska’s northwest coast.
With the Kulluk out of commission, Shell is expected to employ the Noble Discoverer (which drilled in 2012 with the Kulluk) and the Polar Pioneer, a 29-year-old rig.
Shell has invested nearly $5 billion over the past eight years to develop oil fields in federal waters off Alaska’s northern coast, including close to $1 billion in 2013 alone. Despite spending almost $200 million to modernize the 30-year-old Kulluk, now in an Asian shipyard, reports published by European newspapers indicate Shell may be prepared to write off the Kulluk.
Beyond the issues caused by the Kulluk, Shell must certify the Polar Pioneer for Arctic work, must meet regulators’ demands that it overhaul its management system, and mobilize a fleet of support ships to help the two drilling rigs.
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