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Shell's Arctic Drilling Is Far More Risky Than the Company Is Telling Shareholders, Say Conservationists

In a petition to the US Securities and Exchange Commission, the groups say that a spill in the Arctic Ocean could cost the company tens of billions of dollars.
Imagen por Jim Paulin/AP

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The Deepwater Horizon disaster, which occurred just over five years ago, killed 11 workers and sent oil spewing into the Gulf of Mexico for several months. It was the worst spill in US history and has remained a warning of the risks of offshore drilling.

A new petition filed with the US Securities and Exchange Commission accuses Royal Dutch Shell of misleading investors about the risks of drilling in the Arctic Ocean and alleges the company is unprepared to handle a major oil spill.


In the filing, which calls on the commission to launch an investigation, Andrew Sharpless, CEO of the conservation group Oceana, and Mark Templeton, director of the Abrams Environmental Law Clinic at the University of Chicago, warn that Shell's Arctic drilling poses dire risks for the precarious region.

"A spill [like Deepwater Horizon] in the Arctic Ocean could devastate sensitive ocean ecosystems and communities that depend on them and would likely result in costs to Shell of at least tens of billions of dollars," they write. "Response and cleanup would be hindered — or even be made impossible — by ice, weather, darkness, and the lack of infrastructure in the remote and dangerous Arctic."

Sometimes a summer Coast Guard outpost operates in Barrow, 70 miles away from where Shell will be conducting exploratory drilling, but otherwise the nearest Coast Guard presence is nearly 950 miles away in Kodiak, Alaska. And the harsh sea and weather conditions, even in the summer months, make any task done at sea extraordinarily challenging.

In December 2012 the Shell rig Kulluk, complete with 150,000 gallons of fuel and drilling fluid, ran aground off the coast of Kodiak during a vicious winter storm — the capper on a year of setbacks to the company's Arctic operations. Two years later, Noble Drilling, the contractor that operated Shell's drill ships in the region, was found guilty of eight felony environmental and maritime safety violations committed during the 2012 drilling season and sentenced to pay more than $12 million in fines.


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Shell's annual reports "provide only boilerplate generalities" about how expensive a cleanup would be, how the company would pay for it, or the techniques they'd use in tricky Arctic conditions, the filling alleges.

Shell spokesman Curtis Smith told VICE News he disagreed with the petitioners' claims.

"We remain satisfied with our [filling] as it complies with all SEC legal requirements," he said, adding that "a very unlikely spill in the Arctic would not be financially material to the company given the precautions we have taken to prevent and respond to a worst case scenario."

The Arctic is warming twice as fast as the rest of the world due to manmade climate change, which has caused sea ice to melt. In the mid-2000s Shell spent billions purchasing leases offshore of Alaska, and billions more since seeking to drill exploration wells. ConocoPhillips, Statoil, and others have also made heavy investments in the newly slushier, more industry-friendly region.

A Department of Interior analysis of the Arctic's remote Chukchi Sea — where Shell plans to spend $1 billion in 2015 improving drilling efforts — found a 75 percent chance of a major oil spill in the Arctic in the next 77 years if already-granted leases are fully developed and fossil fuel companies extract all they're planning to drill from below the Arctic Ocean.


In addition to the risks posed by a spill, the petition also alleges Shell hasn't disclosed the swarm of pending lawsuits by Alaska's indigenous communities, local governments, and conservation organizations — litigation that "threatens its entire Arctic program," Sharpless and Templeton write.

Related: Is it okay to drill in the Arctic? It's complicated, according to the Obama administration

In late April, the United States assumed the chair of the Arctic Council, which brings together the eight nations with Arctic territory, as well as several observer nations like China and India. Templeton and Sharpless called this an opportunity to "foster fully informed debate about whether and under what conditions resource extraction could occur," and that "fair disclosure of material risks can and should be an important part of that process."

Secretary of State John Kerry has made climate change a high priority for his two-year term leading the Council, saying earlier this month that "there's only 'one Arctic' and all of us — the United States, other nations, indigenous peoples, and Arctic communities — must join together to ensure responsible stewardship of this incredible region."

While Oceana Attorney Mike Levine has said the groups followed requirements and provided sufficient information to justify an SEC investigation, the SEC isn't required to conduct one.

The SEC hasn't publicly responded to the petition.

In January, Shell announced plans to return to the Arctic this summer for the first time since it's disastrous 2012 campaign, using the very same contractor, Noble Drilling. Shell's expanded Arctic drilling, according to Greenpeace's Travis Nichols, is a planetary catch-22.

"The problem is that if they go up and spill, it's a disaster locally. If they go up and don't spill, and succeed, then it's a disaster globally," Nichols told VICE News. "Arctic oil is one of the fossil fuel projects that can't go forward if we're going to mitigate the worst effects of climate change. It's an extreme fossil fuel project in every way. They're going to the ends of the earth — literally — to find the last drops of fossil fuel they can."

Follow Darren Ankrom on Twitter: @darrenankrom