On Winter Solstice, the shortest day of the year when in southern Alaska there’s only a dull half-light for a handful of hours, Shell’s immense drilling rig Kulluk was dragged out to sea from Dutch Harbour, bound for the port of Seattle. This 28,000 tonne machine was being pulled past the Aleutian Islands though worsening storms by the tug Aiviq, which soon developed engine trouble and had to be supported by a sister ship, Alert. But the weather deteriorated and on the 31st December the Alert let go the tow line leaving the rig to be washed onto the shore of Sitkalidak Island, just south of Kodiak Island. It took a week before Shell could announce that the rig had been dragged to the safety of the harbour at Kodiak.
The shock waves of this failure must have passed rapidly back to Marvin Odum in Houston, Shell Director of Upstream Americas, and JJ Traynor in Den Haag, Vice-President of Investor Relations. For the storms that Shell faces are not only in the Gulf of Alaska, but also in the finance sector in London. Here investors have been increasingly concerned over the financial risks around Shell’s attempts to drill in the Arctic – and in order to help inform decisions, a briefing has been released, co-published by us, Greenpeace UK and FairPensions. The series of failures throught the Summer and Autumn of 2012, leading to Shell’s Arctic drilling season being reduced to a pitiful 36 hours at the cost of $4.5 billion, has led analysts to question the rationale of the whole venture.
And Shell faces storms in the political sphere too. The day after the Kulluk was dragged into Kodiak harbour, the U.S. Interior Secretary, Ken Salazar, announced a review of the 2012 Alaskan Arctic offshore drilling programme to look at “practices and identify challenges as well as lessons learned.” If the review makes tough recommendations then this may delay or prevent Shell’s planned Summer 2013 Arctic drilling campaign. Meanwhile in the UK, Joan Walley MP, Chair of the Environmental Audit Committee at the House of Commons, said:
The grounding of the Kulluk rig raises serious questions about the safety of Shell’s operations in the Arctic and we will be calling them back to give further evidence.
Teaming up with FairPensions and Greenpeace UK, we’ve been heavily engaged with asset managers on these issues. A year ago it seemed that many felt that the development of oil & gas in the Arctic was ‘inevitable’ and the debate was as to how sensitively it could be done. We argued that if oil & gas development took place then an accident with a devastating impact on the environment was ‘inevitable’, and consequenly the exploitation for oil & gas in the Arctic should not take place. A year on, after the litany of Shell’s failures, we hope opinions in the investor sector may be shifting.
– See more at: http://platformlondon.org/2013/01/16/another-storm-for-shell-reveals-the-risks-in-financing-arctic-oil-gas-exploitation/?utm_source=rss&utm_medium=rss&utm_campaign=another-storm-for-shell-reveals-the-risks-in-financing-arctic-oil-gas-exploitation#sthash.uvkruYtC.dpuf