Markey Challenges Shell’s Claims on Weather, Taxes in Kulluk Rig Accident

 

WASHINGTON (January 10, 2013) – Rep. Ed Markey (D-Mass.) is challenging claims by Shell Oil that they moved an Arctic drilling rig due to weather reports indicating a prolonged period of good weather, citing inconsistencies with reports from the National Weather Service and tax concerns that could have spurred Shell to attempt to rush their rig across state lines. In a letter sent late yesterday to Shell President Marvin Odum, Rep. Markey disputes claims by Shell Oil that they were moving the rig primarily because of expected good weather in Alaska, but rather that the decision “may have been driven, in part, by a desire to avoid…tax liability on the rig.”

The Kulluk rig, which ran aground in Alaska on December 31, 2012, after tow attempts became too dangerous in rough seas and high winds, was being moved according to a Shell Oil spokesman because there was a “two-week window of good weather.” However, based on conversations between Rep. Markey’s Democratic staff on the Natural Resources Committee and the National Weather Service, the NWS only delivers five-day marine forecasts in Alaska. In addition, shortly after Shell began moving the rig, the NWS forecast began showing the presence of severe weather offshore in Alaska, with winds of 25 to 30 knots and seas in excess of 20 feet, during the period Shell would attempt to move the Kulluk. The letter notes that Shell Oil also ceased regular conference calls with the NWS in mid-November and does not appear to have contacted the agency prior to deciding to move the rig.

In the letter, Rep. Markey asks Shell whether financial concerns were instead the main driver for the decision to move the Kulluk. Under Alaska tax law, if the rig had been in Alaskan waters on January 1, 2013, Shell could have potentially been exposed to a tax of $6 million,

“Reports that financial considerations rather than safety may have factored into Shell’s considerations, if true, are profoundly troubling,” writes Rep. Markey, who is the top Democrat on the Natural Resources Committee. The full letter from Rep. Markey to Mr. Odum can be found HERE.

In the letter, Rep. Markey asks Shell whether tax liability was an issue, and who made the decision to move the Kulluk at that time, among other questions. Rep. Markey had previously queried Shell on their contingency plans for an accident like the grounding of the Kulluk, and also on Shell’s previous testing failure of a containment dome for Arctic oil spills. 

 

Contact: Eben Burnham-Snyder, Rep. Ed Markey, 202-225-2836