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Shell considers joining legal fight over Gulf drill ban

By Eduard Gismatullin
Bloomberg News May 24, 2011

Royal Dutch Shell Plc, Europe’s largest oil company, is examining plans to bring legal challenges over possible losses after last year’s Macondo oil spill, the worst in U.S. history.

“I am considering, but only considering,” Peter Rees, a legal director at Shell, said today at an International Bar Association’s webcast. “Before launching any form of action or deciding not to launch any form of action you need to gather as much information as you can.”

Shell production may be reduced by 50,000 barrels of oil equivalent a day in 2011 because of delays in acquiring drilling permits from the U.S. government after the spill, Chief Executive Officer Peter Voser said on May 17. If delays continue it may impact 2012 output.

The U.S. Interior Department issued new safety regulations after it lifted the drilling moratorium put in place after BP Plc’s Macondo well exploded in April 2010. The blowout, which killed 11 and sank the drilling rig, led to hundreds of lawsuits against BP and its partners and contractors.

Shell Chief Financial Officer Simon Henry said April 28 the company had lost between 25,000 and 30,000 barrels a day of production in the first quarter because of permit delays.

The company may lose about $600 million in revenue this year as a consequence of the spill, Sanford C. Bernstein & Co. said in February. The company postponed about $700 million of investments in the Gulf of Mexico and lost $260 million because of idled rigs in the region last year, Henry said Feb. 3.

Shell has until April 2013 to decide whether to bring any legal challenges, Rees said today.


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