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Environment: Shell’s readiness on Arctic drilling challenged

Conservation group wants SEC to investigate oil company’s statements on plans for oil exploration in the Chukchi Sea

By Summit Voice

SUMMIT COUNTY — Environmental activists say they want Royal Dutch Shell stockholders to know about all the potential risks and liabilities associated with the company’s plans to drill for oil in the Arctic ocean.

In a letter to the Securities and Exchange Commission, the Center for Biological Diversity charges that Shell may have made false and misleading statements, and omitted crucial information about its readiness to drill in the Arctic Ocean.

Considering the chain of corporate events leading up to BP’s massive oil disaster in the Gulf of Mexico, it’s doesn’t require a huge leap of faith to imagine that an oil company may not be completely forthright about its activities, but the environmental group even offered specific examples of Shell’s preparations for oil drilling.

Shell claimed in 2010 that its Kulluk drill rig was ready for use, but an inspection in 2011 found that the rig was unprepared and even lacked a blowout preventer, a key piece of equipment needed to stem potential oil leaks. The Kulluk is currently being repaired in Seattle.

Additionally, Shell has made outlandish claims that it can recover 95 percent of any oil spilled during Arctic drilling, even though BP was only able to mechanically recover about 3 percent of the oil that spilled in the Gulf. And,  the spill-containment device the company intends to use has yet to be tested or proven.

A recent federal report published by the Government Accountability Office also questions the adequacy of existing containment and cleanup tools for the Arctic.

The report explained that, while capping capacities have been strengthened in the Gulf of Mexico, Arctic conditions could render Shell’s reliance on similar technology insufficient. In particular, the report pointed to surface ice, which could “pose a challenge to well containment response;” ice scouring caused by ice scraping the seafloor, which could damage the containment system, Shell’s need to deploy additional personnel to respond to a blowout; and the lack of equipment and infrastructure in the region.

“Drilling for oil in the harsh Arctic environment presents serious risks to people and wildlife. In these conditions, Shell’s claims that it is ready to drill must be closely scrutinized,” said Miyoko Sakashita, oceans director at the Center. “The BP spill caused tremendous damage to the environment and local communities, costing billions. Shell’s drilling in remote, icy waters — set to begin this summer — risks even more.”

After the 2010 Deepwater Horizon spill in the Gulf of Mexico, only 3 percent of the spilled oil was mechanically recovered; after the 1989 Exxon Valdez spill in Prince William Sound, 8 percent of spilled oil was recovered mechanically.

“Shell asserts that it’s adequately prepared for drilling off Alaska, yet there’s no nearby Coast Guard station or other infrastructure in the Arctic for swift oil-spill response,” said Sakashita. “We’re worried about spoiling the Arctic’s pristine wildlife habitat and are concerned that Shell simply doesn’t have the ability to safely drill this summer in some of the world’s harshest waters, so we’ve asked the SEC to look into it.”

BP has already spent more than $22 billion on the Deepwater Horizon disaster, recently proposed a $7.8 billion civil settlement with residents and businesses, and could face additional civil and criminal penalties of up to $60 billion.

The Center’s letter urges the SEC to launch an investigation of Shell with regard to its Arctic drilling program. It follows a report released on April 12 by Lloyd’s of London describing the key risks of Arctic development, including a finding that an Arctic oil spill would present “multiple obstacles, which together constitute a unique and hard-to-manage risk.”

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