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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