Shell Misadventures in the Arctic Region in Alaskan waters

EMAIL RECEIVED TODAY FROM SENIOR SHELL LAWYER/OFFICIAL: “The lack of a rebuttal from, or comment by, Shell does not in any way constitute an acceptance on Shell’s part of the accuracy of any of the points made by you whether now or in the future, and whether on this or on any other matter, and we continue to reserve our position accordingly in respect of those matters.”

MOST RECENT EMAIL CORRESPONDENCE, IN DATE/TIME ORDER, BETWEEN RETIRED SHELL INTERNATIONAL HSE GROUP AUDITOR, BILL CAMPBELL, AND MICHIEL BRANDJES, COMPANY SECRETARY & GENERAL COUNSEL CORPORATE, ROYAL DUTCH SHELL PLC. ALL COPIED TO JOHN DONOVAN

From: Bill Campbell
Sent: woensdag 27 maart 2013 22:25
To: Brandjes, Michiel CM RDS-LSC
Cc: [email protected]
Subject: as explained previously

John

Mr Brandjes apparently has no problems with the publication of the following,  you are free to do so if you see fit

Dear Mr Brandjes – Misadventures in the Arctic Region in Alaskan waters

The US Dept of Interior report recommends that Shell apply strong management of its present and future management of drilling in the Arctic region.  As Company Secretary, a man for whom the use and definition of English grammar may be important the converse of strong is weak, or lets say ineffective in a Shell terminology that we both understand.  We understand RDS accepts the findings in the Dept of Interior report in fact the DOI makes clear in said report that Shell fully co-operated in the formulation of the report.

Principally, due to the good works of the RoyalDutchShell.PLC web site, and contributions to it from your employees and ex-employees we are now aware that a formal audit, into whether the risks of commencing the Arctic region drilling program were as low as reasonably practicable, was due to commence in July 2008, but never in fact took place.

It has been firstly SIEP, and now I assume RDS policy, to carry out such Pre Start-up Audits (PSUA) to give RDS assurance under its governance process that the risks have been independently assessed, and are acceptable to RDS, before start-up.

This is especially so in circumstances where the risks to people, assets, the environment and the RDS reputation of such an activity may need significant controls to mitigate against these risks.

With the recent history of the Deepwater Horizon disaster and how such an event can impact of the reputation and stability of BP a fellow multi-national Company, with its CEO being personally criticized by the US President etc, one would have thought that RDS would have adopted a cautious approach to its activities in Alaskan waters and ensured that essentiial controls were in place with effective oversight from the Hague.

I am not sure why your people in Houston did not want this audit to take place in July 2008 but that it did not take place was unfortunate.  I understand in the preceding years no other independent PSUA took place.

Given that a right of reply by RDS has not been forthcoming it is clear that both you and the Company you represent have no objections, legal or otherwise to the summary below and you accept this summary as an accurate representation of the facts.

Regards
Bill Campbell

Shell accepts failures of its internal management controls contributed to its Alaskan misadventures

Prior to the start of the Alaskan drilling activities a preliminary and independent pre start- up audit (PSUA) of short duration, 4 days, commenced in May 2008 (independent in this sense means carried out by the parent Company using experienced auditors independent from Shell Oil or RDSA as the Company may now be called)..  The PSUA had the comprehensive terms of reference (TOR) and gave an initial view of the risks of this venture.  The risks and spread of risks were comprehensively covered in the TOR and much work was outstanding and needed to be completed in the months and years ahead to reduce these risks to acceptable levels.

The team led by auditors from The Hague was to return in July that year to carry out a full and formal audit where an opinion would be given as to the acceptability or otherwise of commencing drilling activities.   However, contrary to RDS internal oversight and governance processes this formal audit did not take place. 

Therefore, the lack of preparedness as highlighted in the US Dept of Interior report is not surprising.  The subsequent grounding of two vessels may have been as a consequence of RDSA, the accountable party for the safe utilisation of the vessels under its umbrella HSE Case, not fully and independently assessing the risks related to the transit and utilisation of these vessels as required under the RDS governance process.  In short, Shell ignored its own standards.

Suffice to say the DOI report findings are an uncomfortable mirror image of much of the initial findings in the preliminary PSUA of May 2008.  The July 2008 formal PSUA audit if it had been carried out would have converted these findings into recommendations that in turn if implemented would, or should have, prevented the well publicised events that transpired and which caused significant reputation loss to RDS as well as damage to the vessels and collateral costs.

It should also be stressed that the US Coastguard and other external agencies involving hundreds of people assisted Shell and brought the Kulluk eventually to safe harbour, and did so under what must have been horrendous conditions and at considerable risk to Coastguard and other personnel, the Coastguard suffering in the process damage to some of the vessels used in the rescue and recovery.  No person was seriously injured which implies there were injuries but not of a nature to be classified as serious.

These marine transit incidents and associated costs will now be recorded in the Shell financial ledgers and statement of accounts for 2012 as avoidable losses, a very adequate definition requiring no further explanation.

RESPONSE SENT BY MICHIEL BRANDJES TO BILL CAMPBELL AND COPIED TO JOHN DONOVAN

From: [email protected]
Subject: As explained previously
Date: 28 March 2013 07:41:41 GMT
To: Campbell Campbell
Cc: [email protected]

 

Dear Mr Campbell,
 
The lack of a rebuttal from, or comment by, Shell does not in any way constitute an acceptance on Shell’s part of the accuracy of any of the points made by you whether now or in the future, and whether on this or on any other matter, and we continue to reserve our position accordingly in respect of those matters.

Best Regards,
Michiel Brandjes
Company Secretary and General Counsel Corporate
Royal Dutch Shell plc

Registered office: Shell Centre London SE1 7NA UK
Place of registration and number: England 4366849
Correspondence address: PO Box 162, 2501 AN  The Hague,
The Netherlands

Email: [email protected]
Internet: http://www.shell.com

REPLY SENT BY BILL CAMPBELL

From: Bill Campbell
Subject: Re: As explained previously
Date: 28 March 2013 11:23:35 GMT
To: “<[email protected]>” <[email protected]>
Cc: “<[email protected]>” <[email protected]>

Dear Michiel you never fail to disappoint, is this what passes for openness and transparency, this standard lawyer written reply is similar in design to the auto response that safety’s our topmost priority etc.  I do not expect you could be more forthcoming even if you felt so inclined.  Shame that this once  remarkable Company cannot answer the concerns of a shareholder.

I mean what’s so difficult, the US Dept of Interior report, also critical of its own folks responsible for industry regulation says you had weak, ineffective management, if RDS did not agree where is the public statement in rebuttal.

Rgds

Bill

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