* Interior Secretary Salazar says Shell "screwed up" in 2012
* Interior report says Shell did not fully plan
* Shell will need third party audit of management systems
By Ayesha Rascoe
WASHINGTON, March 14 (Reuters) - The U.S. InteriorDepartment said Royal Dutch Shell must submit anin-depth plan before the company is allowed to drill in theArctic again, as the government slammed what it termed thecompany's inadequate preparation for its troubled 2012 drillingseason.
Shell has already said it is "pausing" plans to drill in theArctic again this year after facing numerous setbacks in 2012,when the company undertook preliminary drilling activities.
"Shell screwed up in 2012 and we're not going to let themscrew up ... after their pause is removed," Interior SecretaryKen Salazar said on a press call.
Salazar requested a 60-day day review of Shell's drillingactivities after the grounding of one of its rigs off the coastof Alaska in late December.
The Coast Guard is currently investigating the rig accident.
While Shell was able to safely drill portions of two wellsin the Arctic, the Interior Department's report released onThursday said the company was not "fully prepared in terms offabricating and testing certain critical systems andestablishing the scope of its operational plans."
Shell has spent $4.5 billion so far in its effort to explorefor oil and gas in the Arctic, but has yet to fully complete awell.
The company was able to begin drilling in 2012, but was notable to drill in areas containing oil because it was not able toget its oil spill containment system certified by the governmentin time.
Interior's report found that Shell's problems with itscontainment system were the result of "shortcomings" in thecompany's oversight of key contractors.
In addition to submitting a plan outlining all the aspectsof Shell's expected operations in the Arctic, the company mustalso commission a third-party audit of all of its managementsystems.
Shell said it remains committed to drilling off Alaskaagain.
"We will use this time to apply lessons learned from thisreview, the ongoing Coast Guard investigation and our ownassessment of opportunities to further improve Shell'sexploration program offshore Alaska," the company said in astatement.
Critics of Shell's drilling program said the reportconfirmed their suspicions that the company was not ready tobegin exploration in the fragile and harsh Arctic environment.
"Until Shell demonstrates beyond a shadow of a doubt thatthey have the capability to drill in the Arctic safely, theirdrilling plans should remain on ice," said Congressman EdwardMarkey of Massachusetts, the top Democrat on the House naturalresources committee.
Green groups, who have long argued that drilling in theArctic threatens the environment, said Interior's review did notgo far enough.
"After all the reports that were submitted to Interior, thisadditional report does not give the public confidence that keyconcerns with these extraordinarily complex drilling and marinetransport operations will be addressed," said Lois Epstein,Anchorage-based Arctic program director for The WildernessSociety.