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Cost to Shell of Kulluk Grounding? $90 Million and Counting ….

1:38 pm in Uncategorized by EdwardTeller

Shell arctic drilling deployment scheme

Thursday, at Shell Oil’s annual Results Conference in London, Shell CEO Peter Voser delivered a prepared address on the company’s global performance during 2012.  It included little information about the energy giant’s 2012 Alaska Arctic drilling season fiascos we don’t already know:

“Despite making some progress we have run into problems in the last few months. Our rigs will need more work if they are going to be ready for the 2013 drilling season. One, the Noble Discoverer needs a series of upgrades, and the other, the Kulluk, ran aground in a heavy storm on New Year’s Eve and has been damaged.”

After the address, though, Vosser answered questions from the press.  His answers provided some new information.  Questioned on whether or not Shell had decided to move the rigs when they did to avoid paying millions in Alaska taxes, Vosser tried to wriggle out from under previous statements and information available through Shell officials in Alaska:

Tim Webb, the energy editor at The Times in London, asked Voser if Shell was moving the rig from Unalaska to Seattle in order to evade Alaska’s oil and gas property tax.

“Assuming you say that’s true, because I think that came from Shell, would you say that’s an example of Shell not managing risks correctly, or making a poor decision in terms of managing risk in Alaska?”

In response, Voser denied that the decision to move the rig had anything to do with taxes, saying that the $5-6 million they would have had to pay is nothing in the grand scheme of things.

“There was a statement made by a Shell person, but in a completely different context, in a completely different meeting. That was then taken out of that context and then someone made a story out it. Just to be very clear on this one.”

The original story was written by Dutch Harbor Fisherman reporter Jim Paulin. In it, he quoted an email from Shell spokesperson Curtis Smith that was sent before the grounding. Paulin says he stands by his reporting.

“And I don’t think Shell would be backing away from that comment had it not gone aground. I think they would have been sending lobbyists to Juneau to try to repeal that tax. And I think that would be, in my opinion, the motivation for making that comment that it influenced their decision to move it.”

Reporter Paulin’s statement about Shell lobbyists in Juneau is, if anything, understatement.  During the same day Shell CEO Vosser  was delivering his annual report, in Juneau, the oil industry was flexing its muscle as it only can in Alaska.

The 2012 election brought an end to a Senate bipartisan coalition that dated back to shortly after the FBI busted a number of Alaska legislators for taking bribes from the major oil field service company in Alaska, Veco.  Although it was understood at the time that Veco’s bribers were working on behalf of oil giant ConocoPhillips, no employees from the latter were ever indicted by the Justice Department.  The crooked legislators smugly called themselves “The Corrupt Bastards Club,” and even had baseball caps made with the term plastered across them.

Replacing the bipartisan Senate coalition is a new GOP-run super majority that is intent on ramming through Senate Bill 21, which will repeal the most important element of Alaska’s taxation of oil fields here, and strip billions of dollars per year from state coffers and give it to immensely wealthy oil companies, like ConocoPhillips, British Petroleum and Exxon-Mobil.

Tuesday through Thursday, the Senate Special Committee on TAPS [Trans-Alaska Pipeline System] Throughput held telephonic hearings across the state on SB 21.  About 90% of the testimony was in favor of not implementing SB 21, or of even tweaking our tax rate on the oil industry, which is at the bottom of the middle of the pack worldwide.
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Alaska Blog and Media Coverage of the Kulluk Grounding – Updated

4:12 pm in Uncategorized by EdwardTeller

Kulluk aground

A number of Alaska bloggers have been making efforts to inform their regular readers and others drawn toward the news story of the grounding of and salvage efforts toward the Shell Alaska drilling rig, Kulluk.

In alphabetical order:

Just a Girl from Homer:  Shannyn Moore posts most of her essays first at the Anchorage Daily News, in her weekly op-ed, then at The Mudflats. (see below)

Progressive Alaska:  I’ve been writing articles at PA and at Firedoglake on aspects of Shell’s Arctic Drilling plans since last summer.  Since the Kulluk debacle began unfolding on December, I’ve posted a dozen articles here.  They are easy to find at the bottom right hand border of the blog, as they have been the only articles posted here since December 30th.  Most of those articles were cross-posted at the national progressive blog, Firedoglake.  And some of the Firedoglake articles have not been cross-posted here.

Of those, the most important was probably the one I wrote last night, List of Questions on Shell’s Alaska 2012 Arctic Drilling Fiasco Grows Longer by the Day.  I’m going to use some of that article as the basis for another one at PA, perhaps later today.

Of the articles I’ve posted at both places, the one that seems to have drawn the most attention was my interview with Alaska marine environmental icon, retired University of Alaska Prof. Rick Steiner.  You can read it here.

Because of my background, mostly in the distant past, working at sea in Alaska, on small and large fishing boats, as a charter boat operator, and as a deckhand on oceangoing tugs, including towing one of Shell’s key components of their drilling scheme – the Arctic Challenger – from Seattle to Barrow, and having participated in several salvage operations, I’m able to offer a little more to this subject than some might.

The Immoral Minority:  Jesse Griffin has posted three articles on the grounding.  They can be found and followed at IM under the tag, Shell Oil.

The Mudflats:  This high traffic blog has posted articles by both Jeanne Devon and Shannyn Moore.  Beginning December 31st, The Mudflats has offered two articles by Devon, one by Ryan Marquis,  from I Eat Gravel, one by Thomas Dewar, and an op-ed by Moore.  Four can be found under the tag Shell Oil.  Moore’s op-ed, which is a Must Read, can be found at this link.

Moore’s op-ed raises an interesting point that I don’t think anyone else had yet brought forth:

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.

I quoted Moore in my Firedoglake essay on questions.  The questions that the limited liability clause bring to mind immediately are along the line of “how is it determined who has spent what?” and “how soon will we be able to corner Sens. Begich and – especially – Sen. Lisa Murkowski on this?”

Murkowski’s views are important, as she is a key figure in why this liability limit is so absurdly and unrealistically low.  And she is also a major recipient of political contributions from the builder of the vessel most responsible for this debacle, the Aiviq.

Like me, Moore has a maritime background in her past.   With her network of contacts that rivals the best investigative reporters in Alaska, as was illustrated in her breaking of the strange hiring of “Judge” Paul Pozonsky, Moore will probably have a lot more to add to the Kulluk debacle.

What Do I Know?  Once again, Steve Aufrecht has provided several fresh views of the response to the Kulluk debacle, from his viewpoint as a distinguished professor of public administration.  Steve has written seven articles on this, beginning on January 2nd.  His articles are important enough to be listed here by their individual titles, which are intriguing, as well as inviting: Read the rest of this entry →