Posted by: shannynmoore | January 6, 2013

Shell’s money play is on the rocks

Shannyn Moore for the Anchorage Daily News

Royal Dutch Shell’s Alaska operations could have used a dose of “local knowledge” to prevent their latest debacle: the grounding of the oil rig Kulluk. That phrase, “local knowledge,” should ring a bell for Shell. The company was the one of the largest contributors to a group opposing the restoration of Alaska’s Coastal Zone Management program.kulluk

Why did Shell spend so much money to keep coastal Alaskans away from the table? Don’t they value the experience of local people along the Beaufort and Chukchi coasts? Oh, that’s right. When you’re drilling in their back yards, you only want silent partners.

Here’s the scoop, geniuses. Local knowledge might have helped you figure out that shipping out of Dutch Harbor with only one, largely untested tug, IN THE MIDDLE OF WINTER, wasn’t a good idea. When the Deadliest Catch boats are still tied to the dock, maybe you should ask why.

I’m convinced the decision to leave their special berth in Dutch Harbor was financial. An annual tax of 20 mills is levied on oil company assets in Alaska on Jan. 1. The Kulluk just happened to leave state’s waters about a week before that. Does being Shell-shocked and fetched up still make you taxable?

Shell risked some of the worst sailing weather in the world in an attempt to avoid millions in taxes. Just because most of our Legislature bends every time an oil company exhales, it doesn’t mean Mother Nature will.

I realize I’m swimming against the tide on the issue of offshore Arctic drilling. President Obama thinks it’s a good idea and opened the area to leases after 20 years of closure. (Because he hates oil.) When asked about the safety of drilling in such a precarious place, Interior Secretary Ken Salazar said, “I believe there’s not going to be an oil spill.” Did he believe there would be a $400 million runaway oil rig stuck on a beach?

Our delegation in Washington, D.C., thinks it’s a brilliant idea to drill in Arctic waters even though Alaska doesn’t get the revenue – just the risk of a spill. Awesome.

Shell’s oil spill prophylactics have failed miserably. The company’s containment cap was tested in calm, ice-free waters. The 20-foot-tall dome “breached like a whale” and sank 120 feet, where it was “crushed like a beer can” by the pressure. Its containment barge was fined by the Coast Guard for spilling hydraulic fluid. When they ran aground in Dutch Harbor with the Noble Discoverer, the company denied it had run aground and then had tugs pull the ship off. The NTSB is investigating and Shell has lawyered up.

The backup plan for the latest voyage was another tug in Seward. It makes you wonder if some flatlander looked at a map and thought, “Well, that’s only an inch away.” It took 24 hours at full tilt in 30-foot seas to get that boat where it was needed.

Lloyds of London wouldn’t insure Shell or others in their Arctic venture. They said, “The environmental consequences of disasters in the Arctic have the potential to be worse than in other regions. The resilience of the Arctic’s ecosystems in terms of withstanding risk events is weak, and political sensitivity to a disaster is high. As a result, companies operating in the Arctic face significant reputational risk.”

The 1990 Oil Pollution Act has a limited liability clause. It limits the amount non-tanker vessels can be forced to pay in the event of an accident. So, after Shell has incurred $28 million in expenses, it may be able to invoke its liability limit.

Of the large Western oil companies operating in the U.S. or United Kingdom today, Shell has one of the worst safety records and, according to 2007 data, the highest mortality rate.

The Kulluk, tortured by curling seas and pounded on the surf, may breach. The 150,000-plus gallons of petro products may spill. The response teams will be in harm’s way on a Gulf-facing beach with little access. Boats, booms and white suits will pretend to do something for the cameras. Public relations is always a priority.

I talked to a businessman this week who strongly supports drilling in the Arctic. He’s furious at Shell. He thinks the company’s incompetence is jeopardizing the whole program. He was counting on the work. We are on opposite sides of the argument but we both agreed, if Shell can’t get its act together 50 miles from a Coast Guard base, what business does it have drilling oil wells almost 2,000 nautical miles from one?



  1. Thank you Shannyn! 🙂

  2. When will these clowns realize that oil and water don’t mix!!
    Wars are fought over water and the oil companies have no problem corrupting our seas.
    Thanks for your views Shannon.

  3. I used to fish the onside coast and that is exactly the response I had…They’re towing what? Across the Gulf? In winter? Are they F ing nuts?!!! The Gulf gets 100 foot waves and 100 kt winds in the really big storms.And this is just a wee little drilling platform with a few hundred thou of hydraulic oil. What happens with a blowout off Barrow. Where are they going to find chopped up tires and golf balls to plug up a leak up there. If they get it refloated, there has to be a god who looks out for idiots.

  4. Is this what one would call a “shell game?” Sorry. It’s a sickness.

  5. Thank you Shannyn, from a California fan.

  6. Shannyn. Spot on!! very good read on this situation! Local Knowledge, historic data, ocean data, any mariner that works in the region, cold hard facts about weather in Gulf of Alaska……not just last year, not the past 5 years, data about the past 20 years that shows this wasn’t a storm of the century, it was just a storm like 39% of the storms expected over this time of the year!
    Shannya dig deeper. What surveyor would ever let 500 million in assets cross the gulf with a single tug and single tow wire without any support in sight?? What insurer would risk not only 500 million in assets but billions in lost production in the next years drill season?? Why would the USCG be so supportive of everything thats happen so far?? And last of all…… what vessel in the world could ever go on the beach for 6 days in 15-20′ seas and not be required to be dry docked for a full inspection???? If you had a 30′ charter boat and grounded by accident, the USCG would never let you take a single passenger out without a full hull survey!! Can Shell drill in 2013 with a damage hull???
    If anyone should be review……. it’s our own homeland security, protectors of the shorelines…….our own USCG!!
    Just my questions, my thoughts
    Again great commentary!!

  7. One need only look at parts of Africa to see what Shell will do if people let them.

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