THE SHELL LEAKS FILES: 23 SEPTEMBER 2026
SLF-2007-066
The Sakhalin Papers LVI: Before the Whale Panel — Rick Steiner, Exxon Valdez and the 78 Warnings Shell Faced Before Sakhalin II Phase 2
Yesterday’s file ended with Rick Steiner walking away from the scientific process surrounding Sakhalin II in August 2005. But that was not the beginning of his involvement with Sakhalin. Six years earlier, before Shell became the dominant shareholder and before the enormous Phase 2 development was sanctioned, Steiner and two fellow specialists had already examined the island’s oil industry. Their 1999 report contained 78 recommendations concerning public oversight, environmental monitoring, tanker safety, spill prevention, emergency response and liability. Steiner also delivered a separate warning based on a disaster he knew at first hand: Exxon Valdez.
Archive reference: SLF-2007-066
Collection: The Sakhalin Papers
Principal historical record: Dan Lawn, Rick Steiner and Jonathan Wills, Sakhalin’s Oil: Doing It Right, 1999
Supporting contemporary record: Rick Steiner, Oil Spills: Lessons from Alaska for Sakhalin, Hokkaido University Slavic Research Center, July 1999
Corporate context: Shell held 25% of Sakhalin Energy in 1999; it subsequently acquired Marathon’s 37.5% interest and became the dominant shareholder
Later corroborating records: UK House of Commons Environmental Audit Committee evidence; environmental-finance assessments; contemporary academic and industry records
Evidence standard: The criticisms and risk assessments made by Steiner, Lawn and Wills are attributed to their authors. They were expert recommendations, not findings by a court or regulator. Later events are not presented as proof that any particular warning would necessarily have prevented a particular incident.
Introduction
The previous instalment examined an extraordinary sequence from 2005.
Rick Steiner, then serving on the Independent Scientific Review Panel examining the endangered western gray whales, wrote directly to Royal Dutch Shell chief executive Jeroen van der Veer on 14 July.
The PA-B platform base was to be moved into position the following day.
Steiner wanted the operation postponed.
Sakhalin Energy disagreed.
The tow-out proceeded.
Six weeks later Steiner resigned from the continuing scientific process.
But if that episode is viewed in isolation, an important part of the story disappears.
Rick Steiner had been warning about Sakhalin for years.
And whales were not originally the central issue.
The original concern was oil.
More precisely:
what would happen if a petroleum industry developing in one of the world’s most difficult marine environments suffered the sort of catastrophic failure Steiner had already witnessed in Alaska?
1. Sakhalin, 1999
In July 1999 Sakhalin II produced its first oil.
At that point the ownership structure was very different from the Gazprom-controlled enterprise that exists today.
Contemporary records describe Sakhalin Energy as comprising:
Marathon — 37.5%
Mitsui — 25%
Royal Dutch Shell — 25%
Mitsubishi — 12.5%.
Shell had therefore been a Sakhalin II shareholder since well before the later controversies that came to dominate the international debate. (Slav@Hokudai)
The initial development used the Molikpaq offshore platform in the Piltun-Astokhskoye field.
Oil was transferred through an offshore system for export by tanker during the ice-free season.
It was against that background that three specialists — Dan Lawn, Rick Steiner and Jonathan Wills — examined environmental protection and oil-spill arrangements on Sakhalin.
Their report was called:
Sakhalin’s Oil: Doing It Right
Its full title was even more revealing:
Applying Global Standards to Public Participation, Environmental Monitoring, Oil Spill Prevention and Response and Liability Standards in the Sakhalin Oblast of the Russian Federation.
Bibliographic records identify it as a 46-page report prepared in 1999 for Sakhalin Environment Watch and the Pacific Environment and Resources Center. (apps-afsc.fisheries.noaa.gov)
This was years before the Independent Scientific Review Panel.
Years before PA-B.
Years before Shell’s confrontation with the Russian authorities.
And years before Gazprom took control.
2. Seventy-eight recommendations
Later environmental-finance assessments described Sakhalin’s Oil: Doing It Right as containing 78 specific remedial recommendations.
They covered matters including:
safe tanker routes;
independent inspection of tankers;
tug escorts in hazardous areas;
continuous monitoring of tanker traffic;
better communications between vessels and shore;
substantially greater stocks of spill-response equipment;
improved access to environmentally vulnerable shorelines;
public participation;
environmental monitoring;
and stronger liability arrangements. (wwfeu.awsassets.panda.org)
Evidence later submitted to the UK Parliament’s Environmental Audit Committee specifically returned to the 1999 report when discussing Sakhalin oil-spill dangers.
It cited recommendations for mandatory safe tanker routes, independent tanker inspections, tug escorts, continuous traffic monitoring and substantially greater spill-response capacity. (Parliament UK)
That matters historically.
These were not objections constructed after Sakhalin II had become controversial.
They were being articulated when the offshore petroleum industry was still at an early stage of development.
3. Steiner brought Exxon Valdez with him
Steiner’s involvement had an unusual dimension.
He came from Alaska.
He had been involved in the aftermath of the 1989 Exxon Valdez oil spill.
His separate 1999 paper for Hokkaido University’s Slavic Research Center was therefore deliberately titled:
Oil Spills: Lessons from Alaska for Sakhalin
Its purpose was explicit.
Steiner said he wanted policymakers, industry and the public to appreciate the potentially severe ecological, economic and social consequences of a major Sakhalin spill and to encourage what he described as extraordinary safety precautions. (Slav@Hokudai)
It was both warning and prescription.
The central question was not whether Sakhalin Energy intended to have an accident.
Obviously it did not.
The question was whether an industry operating tankers, offshore platforms, pipelines and loading installations in hostile weather should design its safeguards around the assumption that serious failures can occur.
Exxon Valdez had demonstrated precisely that.
4. The tanker problem
Steiner considered tanker transportation perhaps the most important catastrophic-spill risk associated with the emerging Sakhalin development.
His paper envisaged large tankers moving repeatedly through the region and listed possible accident scenarios:
loss of propulsion;
loss of steering;
navigational error;
grounding;
collision;
structural failure;
fire;
explosion;
and severe weather.
He argued that Sakhalin Energy’s risk work did not adequately address all potential tanker failures and called for a systematic assessment of transportation risks, risk-reduction measures and an overall management plan. (joint-research.sakura.ne.jp)
This was an expert’s assessment.
Sakhalin Energy was entitled to disagree.
But the warning existed.
That distinction is central to this archive.
We do not have to prove that the worst imaginable disaster subsequently happened in order for a contemporaneous warning to be historically important.
Risk management is concerned with what might happen — particularly where consequences could be catastrophic.
5. “Woefully inadequate”
Steiner was particularly critical of spill-response preparedness.
His language was unusually direct.
He described the planned capability as:
“woefully inadequate.”
He challenged the proposition that major marine oil spills could generally be cleaned up effectively and argued that prevention had to receive greater emphasis.
He also questioned whether sufficient boom, skimming capacity, storage, trained personnel, vessels and dispersant capability would be available quickly enough if a large accident occurred. (Slav@Hokudai)
Again, these were Steiner’s conclusions.
They were not findings against Shell.
But in documentary terms there can be no dispute about when the concerns were expressed.
6. Something else appears in the report: corporate culture
One passage is particularly striking when viewed from the perspective of later Shell history.
Steiner recorded that Sakhalin Energy officials themselves had recognised that safety was substantially a matter of:
corporate culture.
He then proposed a confidential reporting mechanism through which employees could report potential safety problems without fear of retaliation.
His reasoning was straightforward.
Workers closest to an industrial operation may see weaknesses before senior management or regulators do.
A company therefore needs an environment in which employees can raise those weaknesses safely. (Slav@Hokudai)
That recommendation looks remarkably modern.
It was written a quarter of a century ago.
7. Public oversight rather than corporate reassurance
Another proposal was for an independent citizens’ advisory council.
The model again came from Alaska.
Following Exxon Valdez, regional citizen oversight mechanisms had been developed to scrutinise oil transportation and spill preparedness.
Steiner proposed something similar for Sakhalin, involving representatives of:
indigenous communities;
commercial fishing;
environmental organisations;
scientific institutions;
universities;
and local government. (Slav@Hokudai)
The underlying principle was significant.
Safety should not depend solely upon a petroleum company assuring the public that its arrangements were adequate.
Those potentially affected should have independent access to information and an institutional role in scrutiny.
That principle would later become highly relevant to almost every major controversy surrounding Sakhalin II.
8. Shell’s role was about to become much larger
When the 1999 work was carried out, Shell owned 25% of Sakhalin Energy.
That changed dramatically.
In October 2000 Shell agreed to acquire Marathon’s 37.5% interest in exchange for upstream assets elsewhere.
Contemporary industry reporting recorded that Shell already held 25%.
The acquisition therefore transformed Shell from one shareholder among several into the dominant corporate participant. (Oil & Gas Journal)
By 2001, industry literature described Shell as holding 55% of Sakhalin Energy, with Mitsui and Mitsubishi holding the remainder after the shareholder restructuring. (J-STAGE)
Then came the really consequential decision.
9. Phase 2
In May 2003 Royal Dutch/Shell announced shareholder approval for the second phase of Sakhalin II.
Its own stock-exchange announcement described Sakhalin Energy as a 55% Royal Dutch/Shell Group company.
The expansion was enormous.
New offshore platforms.
Onshore processing.
Long-distance oil and gas pipelines.
An LNG plant.
Export facilities.
Shell described it at the time as the largest single foreign direct investment project in Russia, involving approximately $10 billion.
The scale of the risk had consequently changed.
The concerns raised in 1999 had not concerned a hypothetical oil industry that never materialised.
The industry became much larger.
And Shell became its dominant foreign corporate participant.
10. The whale issue had not yet taken centre stage
There is another reason why the 1999 documents deserve a place in this series.
They show how the Sakhalin environmental controversy evolved.
The story is sometimes compressed into:
Shell versus the western gray whales.
That is too simple.
Oil-spill prevention, tanker safety, public oversight, fisheries, pollution, indigenous interests, pipelines and environmental monitoring were already subjects of argument.
The critically endangered western gray whale subsequently became the most internationally visible symbol of the dispute.
But it was one component of a much larger question:
What standards should govern an enormous oil and gas development in an environmentally sensitive and physically hostile region?
Rick Steiner was asking that question long before Shell invited independent scientists to examine the whale problem.
11. And then Steiner entered Shell’s scientific process
That brings the documentary chronology back toward yesterday’s instalment.
Several years after Sakhalin’s Oil: Doing It Right, Steiner became one of the scientists involved in the Independent Scientific Review Panel established to examine Sakhalin II’s potential effects on western gray whales.
He was therefore not arriving at Sakhalin with no history.
He had already examined its petroleum risks.
He had already invoked the lessons of Exxon Valdez.
He had already argued for better spill prevention.
He had already called for stronger independent oversight.
And he had already placed corporate culture among the factors determining whether an oil development operated safely.
By 2005 the immediate issue was different.
It concerned whales, PA-B, underwater noise, collision risks, monitoring and the location of industrial infrastructure beside critical feeding habitat.
But the underlying principle was unchanged:
Do not wait for a catastrophe before treating a plausible high-consequence risk seriously.
12. What the historical record establishes
Established
Royal Dutch Shell held a 25% interest in Sakhalin Energy during the period in which Sakhalin II entered oil production in 1999. (Slav@Hokudai)
Dan Lawn, Rick Steiner and Jonathan Wills produced Sakhalin’s Oil: Doing It Right in 1999 for Sakhalin Environment Watch and the Pacific Environment and Resources Center. (apps-afsc.fisheries.noaa.gov)
Later contemporary assessments describe that report as containing 78 recommendations addressing environmental and petroleum-safety issues. (wwfeu.awsassets.panda.org)
Steiner separately presented Oil Spills: Lessons from Alaska for Sakhalin at Hokkaido University’s Slavic Research Center symposium in July 1999. (Slav@Hokudai)
He identified tanker accidents and inadequate spill preparedness as serious concerns and advocated stronger prevention, response and independent public oversight. (joint-research.sakura.ne.jp)
Shell subsequently acquired Marathon’s interest and became the dominant shareholder in Sakhalin Energy. (Oil & Gas Journal)
By 2003 Sakhalin Energy was described by Shell itself as a 55% Royal Dutch/Shell Group company when the much larger Phase 2 development was approved.
Attributed assessments
Steiner believed Sakhalin’s spill-response preparedness was inadequate.
Steiner considered catastrophic tanker spills a serious risk requiring substantially more detailed analysis.
The authors of Sakhalin’s Oil: Doing It Right believed stronger environmental monitoring, spill prevention, response capacity, public oversight and liability arrangements were necessary.
Those are the documented views of the authors.
They are not converted here into judicial or regulatory findings.
Not established
The documentary record examined for this instalment does not establish that every one of the 78 recommendations was rejected by Sakhalin Energy.
It does not establish that implementation of any particular recommendation would necessarily have prevented a later incident.
It does not establish that a catastrophic tanker spill of the kind Steiner feared subsequently occurred at Sakhalin II.
And it would be misleading to present the later western gray whale dispute as simply the continuation of the 1999 oil-spill argument.
The issues were different.
What connects them is the history of risk assessment, scientific challenge and corporate decision-making.
Conclusion: the scientist did not arrive in 2005
Yesterday’s file ended with a resignation.
Today’s file changes the perspective.
Rick Steiner did not suddenly appear in the Sakhalin story in 2005 because Shell had a problem with whales.
He had been examining the environmental risks of the Sakhalin petroleum industry since at least 1999.
Before Shell became the dominant shareholder.
Before Phase 2.
Before the LNG plant.
Before PA-B.
Before the Independent Scientific Review Panel.
Before the confrontation with Moscow.
The 1999 record therefore gives the 2005 correspondence a different significance.
When Steiner wrote to Shell chief executive Jeroen van der Veer asking for the PA-B tow-out to be postponed, the letter came from someone who had already spent years arguing that Sakhalin’s petroleum development required unusually stringent precautions.
And behind those arguments was an experience that pre-dated Sakhalin entirely:
Exxon Valdez.
The warning he carried from Alaska was uncomplicated.
Large industrial systems can appear safe until the day they are not.
By the time Royal Dutch Shell became the dominant force behind Sakhalin II, that warning was already on the record.
Documentary note: This instalment reconstructs events from contemporary and later documentary sources. The observations of Rick Steiner, Dan Lawn and Jonathan Wills are presented as their expert assessments and recommendations, not as independent findings of wrongdoing by Shell or Sakhalin Energy.
Site-wide disclaimer applies.
This also gives us a natural bridge for 24 September: from the 1999 warnings to the crucial period when Shell took control, sanctioned the $10 billion Phase 2 expansion, and environmental opposition shifted from general oil-spill preparedness toward the western gray whale crisis.
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