Shell Oil Boss Marvin Odum Should Resign after Alaskan Debacle
Now we have further confirmation that Shell was trying to dodge a multimillion tax bill. This time confirmation comes from the findings of an investigation by the Coast Guard division of US Homeland Security. There are going to be more Royal Dutch Shell executives looking for alternative employment… And Marvin Odum, Shell’s boss in the USA, should be top of the list.
By John Donovan
After Shell’s Arctic ambitions hit the rocks at the end of December 2012, Shell initially conceded that the ill-fated Kulluk drilling rig had left port under tow to avoid taxes.
Shell then backtracked. Shell’s chief executive Peter Voser rejected accusations that tax issues were a factor in the move.
We subsequently had confirmation from one of the honest people at Shell, Sean Churchfield, its operations manager in Alaska, that the first admission was correct. The Kulluk had indeed left port in order to avoid “millions” in annual state taxes.
Peter Voser spent too much time castigating BP for the Gulf of Mexico disaster and not enough making sure that Royal Dutch Shell did not itself also come spectacular unstuck in US waters. In view of his self-serving comments about BP, he must now be viewed, in my humble opinion, as a hypercritical incompetent.
That high visibility of the series of serious mishaps in Alaska severely damaged the credibility and reputation of Shell and no doubt contributed to the decision by Voser to prudently take early retirement, as did the original fall guy for the Alaskan fiasco, David Lawrence of Alaska.
Now we have further confirmation that Shell was trying to dodge a multimillion tax bill. This time confirmation comes from the findings of an investigation by the Coast Guard division of US Homeland Security.
Having read the relevant Coast Guard report quickly, there were a lot of short cuts taken – needless to say, nobody wants to admit responsibility when things go wrong, so all that the Coast Guard can say is that standards and procedures were not complied with/adhered to. This is usually referred to in court as gross or wilful negligence.
There are going to be more Royal Dutch Shell executives looking for alternative employment… And Marvin Odum, Shell’s boss in the USA, should be top of the list.
It is relevant to recall that Shell reserved its position in respect of an analysis at the time by retired Shell International Group HSE Auditor, Bill Campbell, of the fall out from the Arctic shambles. We published it on this website. See “Shell Misadventures in the Arctic Region in Alaskan waters”
Some readers may have heard of the concept of a “licence to operate” – this is the largely intangible qualification by which oil companies are authorised by host governments to undertake very complex and inherently hazardous operations, and is justified on the basis of the companies’ experience and historical track records for safe operations. The only tangible aspects of a “licence to operate” are the companies’ standards and procedures, which in this case were clearly ignored.
Shell’s “licence to operate” in Alaska should be revoked.
Shell seeks urgency on Alaskan litigation
Extracts from an article by Alan Bailey of Petroleum News published week of April 06, 2014 under the headline: Shell seeks urgency: Asks court to accept BSEE proposal in Chukchi Sea lease sale appeal case
In an April 2 filing submitted to the federal District Court in Alaska Shell said that it opposes any delay in resolving an appeal against the 2008 Chukchi Sea lease sale in which the company purchased leases.“Because the Arctic drilling season is so short, every day of it counts,” Shell told the court. Shell said that it had already lost the 2014 Chukchi Sea drilling season as a result of the appeal and that the company had begun planning for the 2015 season “in the event the agency (BSEE) re-affirms the sale.”
Shell ignored safety warnings ‘partly to avoid tax’, says US Coast Guard
Damning allegations are made in the report into how Shell came to allow the Kulluk to run aground in December 2012. Photograph: PA3 Jon Klingenberg/AP
Shell has been accused by the US Coast Guard of ignoring safety warnings and moving one of its drill ships in the US Arctic, partly in a bid to avoid paying extra taxes.
The damning allegation is contained in an official 152-page report by the US Coast Guard into how the Anglo-Dutch oil group came to allow the Kulluk to run aground in December 2012.
Shell has recently been forced to shelve any plans to drill in the Beaufort Sea again this summer after a federal appeal court ruled the US authorities had failed to properly consider the potential risks.
One senior US politician said Shell should be punished for its “reckless” behaviour and the report raised “major red flags” over any future oil and gas exploration in the pristine waters of the far north.
The US Coast Guard report said Shell’s plans “were not adequate for the winter towing operation across the Gulf of Alaska” while arguing that a potential tax penalty influenced the decision to set sail in stormy weather. The Kulluk was in danger of being subjected to new Alaskan taxes if it stayed in local waters beyond the end of December.
The US Coast Guard quoted the master of a ship brought in from an independent towing company, Edison Chouest Offshore, to oversee the move of the Kulluk as saying early on in the operation: “To be blunt, I believe that this length of tow, at this time of year, in this location, with our current routing guarantees an ass kicking.”
A spokesperson for Shell, which spent $5bn on Alaskan exploration without any significant oil or gas find, said the company was still reviewing the report, which it accepted was based on a thorough investigation and would take any findings seriously.
The official added: “Already, we have implemented lessons learned from our internal review of our 2012 operations. Those improvements will be measured against the findings in the USCG report as well as recommendations from the US Department of the Interior.”
There was no comment on the suggestion that Shell partly moved the rig to avoid taxes but this was previously denied in December 2012 by the now-departed chief executive, Peter Voser.
Meanwhile senator Ed Markey, a Democratic member of the Senate commerce and environment committees in Washington, said: “This report shows that Shell ran through every single safety and common sense red light in moving this rig because of financial considerations. This kind of behaviour should raise major red flags for any future Arctic drilling plans … Shell should be held accountable for its reckless behaviour.”
Shell Rushed Rig to Arctic Sea to Avoid Alaska Tax: U.S.
Article by Jim Snyder published Apr 4, 2014 5:00 AM GMT+0100 by Bloomberg News
A desire to avoid millions of dollars inAlaska state taxes played a role in Royal Dutch Shell Plc (RDSA)’s decision to move a drilling rig, which later broke free from a tow boat and ran aground on an uninhabited island in Alaska, the U.S. Coast Guard said in a report.
Shell had decided to move the Kulluk drill rig to Seattle for repairs because it might have been subject to a state property tax had it remained in Alaska waters beyond Jan. 1, 2013, according to the report released yesterday that offered eight recommendations to improve safety.
“A complex series of events contributed to the error chain that resulted in the grounding,” the report states. “The most significant factor was the decision to attempt the voyage during the winter in the unique and challenging operating environment of Alaska.”
Shell has spent billions of dollars in its effort to drill for oil Alaska’s Beaufort and Chukchi seas, which are part of the Arctic Ocean. The Hague-based company hasn’t resumed work in Alaska waters, and said in January that it didn’t plan to return to the Arctic this year. The decision followed an appellate court ruling that challenged the validity of a lease sale in the Chukchi.
“We appreciate the U.S. Coast Guard’s thorough investigation into the Kulluk towing incident and will take the findings seriously,” Shell said in a statement.
A series of mishaps, including damage during testing to a containment dome that would be used to cap a spill, prompted the U.S. Interior Department to examine Shell’s Arctic operations in January 2013. The review criticized Shell’s oversight of contractors that were part of its Arctic drilling operations.
Senator Lisa Murkowski, an Alaska Republican, praised the Coast Guard for the report and said energy resources in the Arctic can be developed, “but it requires that we adhere to world-class safety standards.”
Senator Edward Markey, a Massachusetts Democrat, said in a statement that the report raises “major red flags for any future Arctic drilling plans.”
To contact the reporter on this story: Jim Snyder in Washington atjsnyder24@bloomberg.net
To contact the editors responsible for this story: Jon Morgan atjmorgan97@bloomberg.net Steve Geimann
COAST GUARD REPORT (152 PAGES)
Shell was underprepared for ill-fated tow across Gulf of Alaska
April 3, 2014 by AlaskaDispatch under the 
headline: Coast Guard report shows Shell was underprepared for ill-fated tow across Gulf of Alaska
A Coast Guard report released Thursday shows that while a series of events ultimately led to the grounding of a drilling rig designed to drill in the Arctic, an “inadequate assessment and management of risks” was the biggest cause of the Kulluk grounding.
The findings in the 152-page report conclude that while bad weather in the Gulf of Alaska was the primary cause of the grounding, “ineffective” risk management and application of towing measures from Shell and Edison Chouest contributed to the grounding.
The report lays out in specific detail everything that led to grounding of the drilling rig, which was heading to Everett, Wash., where offseason repairs could be completed ahead of the planned 2013 Arctic drilling season. The move was also timed to avoid a tax liability that would have left Shell on the hook for millions of dollars had the Kulluk remained in Alaska waters.
“The Coast Guard report shows that Shell was completely unprepared for the realities of operating in Alaska’s harsh seas,” said Rebecca Noblin, Alaska director for the Center for Biological Diversity. “But what’s even more troubling is it shows Shell’s willingness to subsume safety concerns to financial ones.This isn’t just about making mistakes; it’s about knowingly taking unnecessary risks to save a few dollars.”
As of late last year, the Kulluk remained in Singapore undergoing repairs. In October, a Shell executive hinted that damage to the rig was so extensive that it might not come back into service.
COAST GUARD REPORT (152 PAGES)
Extract
The exploration campaign in the Arctic waters, which has been hit by protests and legal challenges, along with major technical difficulties, was estimated last year to have already cost about USD5 billion to Shell, before the company had drilled into a single oil-bearing rock. Ben van Beurden, the group’s new chief executive, has been non-committal on whether the company plans to drill the region in the future.
Alan Shatter rejects Corrib policing probe
Extracts from an article by Gordon Deegan published Friday 4 April 2014 by The Irish Examiner
Minister for Justice Alan Shatter has rejected fresh calls for an independent inquiry into the Garda policing operation of the €3.4bn Shell Corrib gas project in north Co Mayo. Last week, South African archbishop Desmond Tutu and former UN assistant secretary general Denis Halliday called for an “urgent and comprehensive” independent inquiry into the policing of the Corrib gas project. Mr Shatter said: “I do not see a necessity for an independent inquiry into the policing operation in north Co Mayo.” He said the total cost of policing protests against the Shell Corrib plan “has now reached in excess of €16m”.
Poor Management and Tax Dodging Led to Kulluk Grounding
Article by RACHEL D’ORO Associated Press published 4 April 2014 by ABC NEWS under the headline: “Report: Poor Management Led to Shell Grounding”
A Coast Guard report says poor risk assessment and management were factors that led to the grounding of a Shell oil drilling rig in the Gulf of Alaska in 2012.
The report released Thursday also says Alaska’s tax laws influenced the decision to tow the Kulluk to Seattle. Royal Dutch Shell PLC believed the drill vessel would have qualified as taxable property on Jan. 1, 2013, if it was still in Alaska waters.
The Kulluk broke away from its tow vessel in late December 2012 and ran aground four days later on Sitkalidak Island, near Kodiak.
Damage to the Kulluk played a role in Shell’s decision to forego Arctic offshore drilling in 2013.
The Coast Guard report says sufficient evidence exists for other authorities to consider penalties.
The TRUTH will set you FREE.
