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OPINION: We told you so

Screen Shot 2013-01-11 at 20.09.51Anyone who has followed development like this for any length of time will not be shocked that Shell officials lied to cover their interests following the grounding of the Kulluk. But this blatantly obvious situation should motivate elected officials and the Coast Guard to require more oversight. We’ve been handed a gift with the Kulluk grounding, the gift of time and perspective. Hopefully, Alaska will make good use of it.

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May 31st 2:53 pm | Carey Restino

Last week, the operations manager for Royal Dutch Shell told Coast Guard investigators that the end-of-the year tax liability was a primary consideration in the decision to move the Royal Dutch Shell contracted rig the Kulluk from Unalaska before the end of the year.

That’s what Alaska Media reporter Jim Paulin reported back when the Kulluk went aground. He’d followed up on a tip that he’d heard long before things went awry in Shell’s world and the response he got back from a Shell spokesman was very clear – taxes were a factor, and a frustration to the company. No one said for sure how much liability Shell faced for the Kulluk but the term “millions” was floated around. Some news agencies came up with $6 million based on general assumptions about the value of the rig. Alaska taxes 2 percent of the value of property used in oil and gas exploration, and properties are assessed on Jan. 1. The state tax examiner later said that because the oil exploration conducted by Shell occurred outside state waters, the rig was not liable for taxes.

But no one knew that then, and when the rig ran aground, and the song about how much role taxes played in the move changed substantially from Shell. All of a sudden, everyone seemed to be denying that taxes played a role. The company’s Vice President of Alaska operations Peter Slaiby, denied the report. He told Kodiak officials, “That was unfortunate article. No the answer is not that it was not that it was leaving for taxes. It had very specific things it needed to happen in Everett (Washington).”

Shell’s Chief Executive Officer, Peter Voser, reportedly made similar statements in late January, when interviewed by a British reporter. He claimed that the money Shell would have had to pay was nothing in the grand scheme of things and said that a statement was taken out of context and made into a story.

But when Sean Churchfield, operations manager for Royal Dutch Shell testified last Saturday, a different story emerged. Sure, Shell wanted to move the Kulluk because it needed to repair some parts that would have been difficult to repair in Unalaska. And yes, it would have been expensive to maintain the rig in Alaska. But the potential tax expense was the driving factor of the move, a move during one of the most dangerous times of year to navigate Alaska’s waters.

Churchfield himself had been asked in the past about the tax issue and what factor it played in the move. It was not the reason for the move, he told reporters in January. Curtis Smith, the Shell spokesman who initial told the reporter that the tax liability was part of the reason for the move, also backtracked after the Kulluk ran aground on Kodiak Island, saying taxes were considered but not the primary factor in the move.

But when under oath, Churchfield’s testimony contradicts all that and sheds light on a fact that will come as a surprise to no one – people lie, especially when lots of money is involved. They lie to make themselves look good, to protect their interests, their jobs and their reputations. They especially lie when stuff hits the fan and they are scrambling.

That is why strict government oversight is absolutely essential in situations like this when public interests – lives of rescuers, the environment, not to mention state coffers – are at stake. While Shell was required to comply with some regulations and a tow plan was filed for this move, it is obvious that more oversight is needed when guiding those who want to make money by drilling for oil off Alaska’s waters.

Why, for example, didn’t the state or the U.S. Coast Guard, require a pilot from Alaska be present on the tow vessel Aiviq to help that crew make good decisions based on knowledge of Alaska waters. When the Russian icebreaker Renda was guiding a shipment of fuel to Nome through ice-choked waters, a marine pilot was on the vessel, helping guide the captain through. I suspect that such an individual would have made very different decisions than the Aiviq crew and Shell made in the days leading up to the Kulluk grounding. Hindsight is always 20/20, but in talking to mariners after the incident, it is painfully obvious that several key mistakes were made, such as not seeking safeharbor immediately when things went wrong. The decisions Shell made might have been in an effort to save face, or to save its equipment, but whatever the motivations, they backfired, as often is the case when people are trying to protect things and outcomes they are attached to.

For now, the offshore drilling program in the Arctic has stopped, but that is most likely a temporary lull. Most likely, the drilling will resume, with both Shell and other companies entering the quest for oil. It’s up to Alaska to protect its resources by demanding that more safeguards be put in place, not in the form of voluntary compliance requirements by companies, but in the form of actual oversight by human beings without an interest in making millions at Alaska’s expense. That is the only way that the people of the Arctic as well as the rest of Alaska can have any security that sound decisions are being made. That oversight is bound to be inconvenient to outside companies, and possibly cost them money. But we must demand it, or else history will repeat itself – or worse.

Anyone who has followed development like this for any length of time will not be shocked that Shell officials lied to cover their interests following the grounding of the Kulluk. But this blatantly obvious situation should motivate elected officials and the Coast Guard to require more oversight. We’ve been handed a gift with the Kulluk grounding, the gift of time and perspective. Hopefully, Alaska will make good use of it.

SOURCE OF COPYRIGHTED ARTICLE

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

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