http://grist.org/news/surprise-shells-rig-ran-aground-in-alaska-because-the-company-was-trying-to-avoid-taxes/

Why am I not surprised????? Drilling in the Artic should be banned given the oil & gas industry’s inability to deal responsibly with their operations. DV

By Philip Bump

On New Year’s Eve, in the middle of a storm, Shell was trying to tow its Kulluk drilling rig from Alaska to Seattle. Why then? Why risk the bad weather, which, as it turned out, caused the rig to break free from its tugboats and run aground on Kodiak Island?

To avoid paying state taxes, of course. From Alaska Dispatch:
A Shell spokesman last week confirmed an Unalaska elected official’s claim that the Dec. 21
departure of the Kulluk from Unalaska/Dutch Harbor involved taxation.

City councilor David Gregory said Shell would pay between $6 million and $7 million in state
taxes if the Kulluk was still in Alaska on Jan. 1.

Ah, but the weather had other plans, sorry to say. Shell will end up having to pay that money after all, and then some.

Gregory said the departure of the Kulluk took money away from local small businesses servicing the rig. He predicted the maritime mishap will prove very costly to the oil company.

“It will cost them more than that $6 million in taxes. Maybe they should have just stayed here,” Gregory said.

The Kulluk grounding is costing taxpayers too. The 630 people working on the unified relief effort include employees of the state of Alaska and the U.S. Coast Guard. Twenty-one vessels are on the scene or nearby, and that doesn’t include aircraft.

Last night, the unified command held a press conference to update reporters on the status of the recovery. In short: Not much has changed. The Kulluk remains where it ran aground. Efforts to determine damage are still incomplete. The tens of thousands of gallons of fuel onboard don’t appear to be leaking.

One reporter asked a pointed question about how forthcoming Shell will be in sharing its assessment of the accident. You can guess the response.

Margie Bauman [reporter from Fishermans News Seattle]: [G]iven the seriousness of this
incident, why would Shell’s own investigation of this not be made public along with the Coast
Guard investigation? Thank you.

Sean Churchfield [Incident Commander and the Operations Manager for Shell Alaska]: OK. So
I think the main point I’d like to make on the investigation is Shell will collaborate, completely
cooperate-collaborate-collaborate completely with the Coast Guard and other investigations that are required.

Margie Bauman: Yes. But I’d like to know (cross talking)Š
Captain Paul Mehler [Coast Guard Federal On Scene Coordinator]: (Inaudible). But the Coast
Guard investigation, as I say, we’re bringing up investigators from the Center of Excellence, and we have our investigators working that. And of course the results of those findings will be made public.

Margie Bauman: And would that include Shell’s Š
Amy Midget [unified command representative]: And we will have those said (ph) remarks posted online for anybody who-on the phone system who is not able to hear them.
In other words, don’t hold your breath for Shell to be forthcoming.

There is some good news in all of this, for Shell anyway: The U.S. government shows no indication that it will reconsider the company’s permit to drill in the Arctic.

“The administration understands that the Arctic environment presents unique challenges and
that’s why the [interior] secretary has repeatedly made clear that any approved drilling activities will be held to the highest safety and environmental standards,” Salazar spokesman Blake Androff said Thursday. “The department will continue to carefully review permits for any activity and all proposals must meet our rigorous standards.”

Salazar has not given Shell permission to drill deep enough to actually hit oil. The company
hopes to get that approval this summer.

Shell didn’t get that permission last year because it was unable to demonstrate to the government that its spill-containment system would work, even after repeated testing.
All this mess so Shell could avoid $6 million in state taxes – an amount equal to 0.1 percent of its profits in the third quarter of 2012. Good to know that Shell puts money over safety. Bodes well.

Philip Bump writes about the news for Gristmill. He also uses Twitter a whole lot.

Special thanks to Richard Charter

www.eenews.net/5023F022.jpg

(Thursday, January 3, 2013) Phil Taylor, E&E reporter

Three days after a Royal Dutch Shell PLC drillship grounded onto an Alaskan island, environmentalists today called on the Obama administration to place a moratorium on all Arctic drilling, arguing that the company’s season of mishaps and regulatory problems could spell disaster.

While the Coast Guard, state and industry officials continue to monitor Shell’s Kulluk drillship — which continues to rock gently on a beach south of Kodiak, carrying more than 150,000 gallons of fuel — environmentalists said the administration should put the kibosh on the company’s 2013 exploration plans.

“Shell is not Arctic-ready,” said Chuck Clusen, director of the Natural Resources Defense Council’s national parks and Alaska projects, in a teleconference with reporters. “We have lost all faith in Shell.”

In the coming days, environmental groups plan to reach out to administration officials to urge that Shell and federal partners “stand down” on Arctic exploration activities, Clusen said.

They did not say how long such a moratorium should be in place but argued that more research must be put into Arctic ecosystems, that better regulatory and legislative protections must be in place and that adequate cleanup methods must be available before new drilling is authorized.

Their call comes days after the Kulluk was sent adrift by hurricane-like winds and four-story waves as it was being towed south to Seattle for repairs (Greenwire, Jan. 2).
It was the latest, and potentially most significant, mishap during Shell’s 2012 drilling season, which resulted in two exploration wells being spud in the Beaufort and Chukchi seas by the drillships Kulluk and Noble Discoverer, respectively — the first in roughly 20 years.

The mishaps include the near-grounding in July of the Noble Discoverer, which stopped about 100 yards short of the Dutch Harbor shore (Greenwire, July 16, 2012). Drilling activities were also slowed significantly by lingering sea ice; delays in the Coast Guard’s certification of Shell’s Arctic Challenger oil spill response vessel; the company’s failed test of its oil spill containment dome; and Shell’s inability to meet initial air pollution standards.

It is unclear what kind of damage the Kulluk sustained and how much time and money will be spent to fix it before drilling is set to resume in midsummer. It is unlikely Shell could drill any wells in the Arctic without the Kulluk, which federal officials have required to be available to drill a relief well in the case of a blowout in the Chukchi.

“It may be the federal government doesn’t have much discretion in the matter,” said Lois Epstein, Arctic program director for the Wilderness Society, who cited the darkness, ice, freezing temperatures and this past week’s cyclone in the Gulf of Alaska as examples of the risks Shell and others will face.

“There’s no credible evidence that Shell can operate safely and without incident,” Epstein said.

A spokesman for the Interior Department today said that if drilling does occur this summer, the agency will continue to have inspectors on board each drill rig around the clock.

“The administration understands that the Arctic environment presents unique challenges, and that’s why the secretary has repeatedly made clear that any approved drilling activities will be held to the highest safety and environmental standards,” Blake Androff said. “The department will continue to carefully review permits for any activity and all proposals must meet our rigorous standards.”

The Bureau of Safety and Environmental Enforcement has yet to issue drilling permits for Shell for the 2013 season.

BSEE yesterday said the Coast Guard is in charge of the design, construction, manning and navigation of the Kulluk when it is in transit and will continue to certify compliance of all mobile offshore drilling units sailing within the United States. The Coast Guard said it would make its investigation of the grounding available to the public.

In addition to drilling permits, Shell must also obtain new air permits for its summer drilling, and its oil spill response plan is still the subject of a federal lawsuit, Clusen said.
Shell has not said what impact the grounding of the Kulluk will have on its drilling plans this summer.

After an exhaustive review, the Obama administration last summer permitted the company to drill “top-holes” that stop short of oil-bearing reservoirs, as Shell struggled to certify its main oil spill response vessel, the Arctic Challenger.

President Obama is seen as favorable to Arctic drilling, and a moratorium there would open him up to fresh attacks from oil backers in Congress who say he has stifled oil and gas production from federal lands and waters.

But a moratorium would find support among many Democrats, including Rep. Ed Markey (D-Mass.), the top Democrat on the House Natural Resources Committee. He sent letters today to the Coast Guard and Shell requesting information on how the company plans to respond to incidents such as this week’s grounding and how it will safely drill in the Arctic.

“This is just the most recent incident in Shell’s attempt to drill offshore in the Arctic and it raises serious questions about the company’s ability to conduct these operations safely and in a way that protects the environment,” Markey said in the letters.

But proponents of Arctic drilling were quick to point out that Monday’s grounding was a transportation accident far from Shell’s drilling sites and that it did not involve any crude oil.

Shell has taken unprecedented steps to ensure that a blowout does not occur off the North Slope, pledging to allow 24-hour monitoring by federal inspectors; to use double shear rams on its blowout preventers; and to have a fleet of oil spill response vessels on guard nearby, proponents said.
Latest on the Kulluk
Recovery personnel continue to monitor the Kulluk, which is on a sand and gravel beach off southeast Sitkalidak Island, an uninhabited island separated by a narrow strait from Kodiak Island.

The grounding took place Monday night about 40 miles southwest of Kodiak City after towboats lost power and disconnected from the Kulluk amid hurricane-like winds.

After being thwarted by inclement whether Tuesday, a team of five salvage experts yesterday was able to board the drillship for the first time to conduct a three-hour structural evaluation and begin finalizing salvage plans.

A Coast Guard MH-60 Jayhawk helicopter also delivered an emergency towing system to the Kulluk deck to assist in towing the 30-year-old vessel, which has no propulsion, to a place of refuge.

Coast Guard Capt. Paul Mehler, the federal on-scene coordinator, said yesterday that no divers were deployed to inspect the ship. There are still no signs of oil sheen or environmental impact.

The vessel’s three fuel tanks are clustered together near the center of the drillship and are protected by a double hull and space around the tanks.

“It’s a little premature for us to speculate on different ideas” about the salvage plans, Mehler said, according to a Twitter post from the Unified Command, which includes the Coast Guard, Alaska’s Department of Environmental Conservation, Shell and Noble Corp., whose personnel were manning the Kulluk.

The weather as of 6:30 Alaska Standard Time last night was slightly calmer, with winds at about 35 mph and seas at about 12 feet with occasional wave heights of 18 feet. Today’s weather is expected to be calmer still, with southeast winds of about 15 mph, gusting to 25 mph, and seas up to 9 feet.

Alaska DEC said two locations have been identified where steps could be taken to protect known salmon streams in the immediate area.

Threatened or endangered species potentially in the vicinity of the accident include Steller’s eiders, Southwest sea otters and Steller sea lions.

The Kulluk assessment team has spotted sea lions in the water near the ship, and goats were spotted on the adjacent uplands.

Special thanks to Richard Charter