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Shell Oil Ignored Arctic Safety Warnings "Partly to Avoid Tax"

Shell Oil Ignored Arctic Safety Warnings "Partly to Avoid Tax"
Tue, 4/8/2014 - by Terry Macalister
This article originally appeared on The Guardian

Shell has been accused by the U.S. 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 U.S. 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 U.S. politician said Shell should be punished for its "reckless" behavior and the report raised "major red flags" over any future oil and gas exploration in the pristine waters of the far north.

The U.S. 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 U.S. 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 $5 billion 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 behavior should raise major red flags for any future Arctic drilling plans … Shell should be held accountable for its reckless behavior."

Originally published by The Guardian

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