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Shell CEO Peter Voser and the Arctic Fiasco

Screen Shot 2013-03-20 at 09.53.55 In February 2011, Peter Voser, who can be compared with Custer for leading an ill-advised charge, was becoming irate about the delays stating: “I’m not prepared to take the uncertainty and pay the money and then not get to the drilling,”; “We need urgent and timely action on permitting to go ahead with the 2012 drilling program.”

By John Donovan

It is appropriate, in view of Shell’s Arctic debacle, properly condemned by the U.S. government, to reflect on the campaign by Shell to lead the anticipated exploration charge into the pristine Arctic/Alaskan waters.

Shell promised that it was fully prepared and pressed heavily to get underway, steamrolling serious misgivings by many parties.

Shell took an aggressive approach to such opposition, obtaining an injunction against Greenpeace to prevent any interference.

As has become abundantly clear, Shell was wrong and those with misgivings were proved right.

Royal Dutch Shell CEO Peter Voser was responsible for sending antiquated drilling vessels blundering into Alaskan waters, putting cost savings before safety considerations.

In May 2010 Shell defied calls for a moratorium on offshore exploration in the Arctic.  Peter Voser assured shareholders at the AGM that Shell would only drill there if it thought it could be done “safely and responsibly”.

In November 2010, the New York Times published an article under the headline: “Shell Presses for Drilling in Arctic“. Shell launched a public lobbying campaign, including national advertising. Peter Slaiby, Shell’s vice president for Alaska, said in an interview: “Every day we’re delayed, we’re delaying jobs and energy development; “It’s a crushing irony that the Gulf of Mexico moratorium is lifted and we are not allowed to move forward.” Shell executives insisted that drilling in Arctic waters was safe.

In February 2011, Peter Voser, who can be compared with Custer in leading an ill-advised charge, was becoming irate about the delays stating: “I’m not prepared to take the uncertainty and pay the money and then not get to the drilling,”; “We need urgent and timely action on permitting to go ahead with the 2012 drilling program.” (Extracts from a further New York Times article)

A few months later, Voser said: We plan to drill up to 10 wells in 2012 and 2013“.

In January 2012 Voser was quoted as saying: “Of course developing the Arctic has environmental challenges but I believe these challenges can be managed with the right approach to safety and to sustainability.”

In March 2012, Shell directors were criticised by British MPs for alleged complacency over safety plans for future drilling in the Arctic. (From Guardian article “Shell boss got £10m pay package amid price surge“)

A few months later Voser was claiming “On the prevention part, I think we have gone further than anywhere else in the world in Alaska with our safety systems.”

Voser stated that it was absolutely key that reliable operators were used to develop Arctic resources saying:It needs, clearly, the best preparation to actually develop these resources. We have spent a lot of time over the last few years to, for example, further develop our drilling ships. We are a very transparent company.”

(Many shareholders would take issue with Vosers claim about transparency, bearing in mind the reserves fraud when Shell executives, including his current colleagues, such as his sidekick, Simon Henry, kept quite about what they knew.)

Shell rightly ended up being condemned by the U.S. Interior Secretary Ken Salazar who memorably concluded: “Shell screwed up in 2012“. 

Federal regulators have said that they will not allow Royal Dutch Shell to resume exploratory drilling off the coast of Alaska until the company comes up with a detailed operations program and management plan for operating in the Arctic to head off the mishaps that plagued the company’s debut drilling season in 2012.

Content from the linked articles has been extensively used in the above comments.

REPORT PUBLISHED BY U.S. DEPARTMENT OF THE INTERIOR: MARCH 8, 2013

COMMENT POSTED ON SHELL BLOG BY “shellwaarbenjijnu”

I have finished reading through the US Dept of the Interior Report “Review of Shell’s 2012 Alaska Offshore Oil & Gas Exploration Program” dated March 8, 2013. One observation contained in Section E “Shell’s Operational Oversight and Management Systems” caught my eye. Quote:Shell’s focus appeared to be on compliance with prescriptive safety and environmental regulations required for approvals and authorizations, rather than on a holistic approach to managing and monitoring risks identified during operational planning.Unquote What has happened to the development of the full safety case approach and its subsequent challenge & review which Shell insists is the norm before embarking on such an operation? How often do senior people take it upon themselves to “have a good look” once in a while? Or are we witnessing the inevitable consequence of having a Swiss bean counter in overall charge of the company compounded by Technology, Projects and Safety run by a Swiss “my way or the highway” explorer? Of course it may be that the US arm of EP or “Odum Shell” does things its own way, free at last from the pesky Royal Dutch strictures (re)developed in the 2000s in the pursuit of technical and Operational Excellence. The company was once a byword for technical and operational proficiency but that was consigned to the dustbin of history by a previous bean counting Chief Executive Cor Herkstroter. Sadly, the question does remain: “Shell, waar ben jij nu?”

COMMENT POSTED ON SHELL BLOG BY “Texvette”

I recently read the following comment from Marvin Odum regarding the Alaska fiasco: “this was a marine transit issue that occurred after completion of our exploration program and well outside our theater of operations”. Give me a break ! This is a classic example of Shell trying to assign blame and responsibility to other parties. It was Shell who decided to use very old and outdated equipment, as well as attempt to move this equipment during horrible weather conditions. Shell has to take full responsibility for its’ operations, regardless of whether it is “drilling”, “marine transport”, etc.

COMMENT RECEIVED FROM “an old EP hand”

Shellwaarbenjijnu: I will reveal a small secret and answer your question: Shell as we knew it has disappeared. Most of the culprits that started and implemented the transformation have gone too, many with fat redundancy packages (Madam Cook and Brinded, just to mention a few). You must have read in the dutch papers how small minded this great brain of Brinded was? Writing a pathetic clause in his contract that Shell would compensate him for loss of value of his house.
 
But back to Alaska. Shell not only failed in the corebusiness of drilling complex wells in a sensitive environment, they also failed on about all other aspects. The word cluster f*ck comes to mind. And I thought that bringing in nontechnical people preferably of the female gender was going to take Shell to a higher level.

In fact what happened is that the genuinely talented women in Shell left because they did not want to be seen as ‘excuus truus’ (as well as a great deal of people with technical know-how) and the vacancies have been filled with ex politicians (preferably leftwingers) who have one thing in common: they are good public speakers. But I can explain to them that you cannot talk a well into the ground. Just as Obama and his cronies cannot talk themselves and the USA out of the miserable problems they have created.
 
Presumably in a few years several books will be written on ‘How to destroy a great company’. They only need to look at Shell from 1994 onwards.

Overpromise and underdelivery became the norm, professionalism disappeared. And we knew better having seen the failed project called DITN (Drilling in the Nineties; when the rig goes, so does the overhead…..) but Herkstroter et all did not want to listen. None so deaf as them that do not want to hear. But the PR and HR outfits exploded and tried to convince everyone that they were the corebusiness of Shell. Hah! They merely accelerated the demise by moving away from rewarding solid performance to rewarding porky stories. We had the best resourcing and staff development programmes in the business (Hofmeister told me himself). I would not take bets now it still is the same. Hofmeister (the american) worked hard and succeeded to increase salaries (especially for americans) and by doing so he brought in a new type of Shell person. Status became important, me first, company later. And when you have these at the top, the rest follows very quickly. There is no loyalty anymore and the results are obvious to all. This whole Alaska disaster has many parallels with the Kashagan disaster in the late 90s. Then the reserves crisis. And what of the fourfold increase for the Sakhalin budget and even worse for Pearl? And how is Schoonebeek doing now? There were a lot of great stories a while ago, it now is very quiet. Yet, Shell has been saved by the high oilprice and these projects are being sold by PR as ‘moonshots’ and highly successful! We all know otherwise. And so far I have not seen any consequences. How come Odum has not been fired? Just read the last attachment at the end of the report. This flowery letter of Odum, ‘trust me, all is well, we are Shell’. It really makes me puke and I am glad I have retired from this once great company.

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