Shell Game: More Poor Planning (Updated)

Shell Oil Company has demonstrated yet more bad planning. Come on now, you can’t be surprised.

On the Beach - Shell's Noble Discoverer

On the Beach – Shell’s Noble Discoverer

This is the company that brought us the Keystone Cops drilling attempt in the Chukchi and Beaufort Seas in 2012, with vessels run aground, failed containment tests, innumerable marine safety violations and countless broken tow lines. It’s only funny because none of the piss-poor planning resulted in a death or environmental catastrophe.

In 2013 and 2014, Shell took a corporate time out. Now, the brass at Shell have belatedly noticed that its ten year leases to drill off northern Alaska start to expire in 2017. Of course, Shell has known that since before it bid on the leases in the first place. The time to do something about it would have been before submitting bids. You know, something along the lines of, “We’d be interested in bidding if the lease terms were 20 years.” The Bush administration would have tripped over its feet accommodating Shell’s demands requests.

But planning isn’t a Shell Oil Company strength, based on the record. Well, good planning isn’t a strength. They’ve got bad planning wrapped up.

The reasons Shell offered in support of its request for a five year extension are far from compelling. According to the Alaska Dispatch News, Shell Alaska Vice President Peter Slaiby claimed:

Prudent exploration is now severely challenged prior to the current lease expiration dates . . . due to the repeated erected barriers to exploratory activities, the already severe disruption to Shell’s exploratory efforts, limited rig availability, brief operating windows and the unusually long lead times required to mobilize activities in Alaska. Despite Shell’s best efforts and demonstrated diligence, circumstances beyond Shell’s control have prevented — and are continuing to prevent — Shell from completing even the first exploration well,

The “severe challenges” were either utterly foreseeable, or the result of Shell’s own egregious blunders. Shell was fully aware there would be litigation and claims that the environmental impact statements were inadequate; some of that litigation was filed long before Shell submitted its bids. Foreseeable events are no basis for an extension.

The claim of “severe disruption of Shell’s exploratory efforts” and “limited rig availability” are purely a result of the aforesaid piss-poor planning. But oddly, Shell never mentioned its numerous blunders, marine safety violations or poor judgment in its request for additional time. WC is certain that was just oversight.

If WC can’t make his mortgage payment because he put the mortgage payment on a draw to an inside straight in Vegas, you wouldn’t expect his mortgage company to be very understanding.

Shell made the same kind of bet and, embarrassingly, badly flubbed the bet. WC’s pals at Oceana have it exactly right:

In the letter, Shell acknowledges the difficulties of operating in the Arctic, with challenges including the lack of “basic infrastructure,” and shows why we should be asking whether good planning, effective risk management, and a careful reconsideration of whether safe exploration or development in the Arctic is possible at this time. These acknowledgements come on the heels of Shell’s arguments to the White House Office of Management and Budget that Arctic-specific safety and prevention regulations are unnecessary and too costly.  So, on the one hand, the company blames the unique Arctic Ocean conditions for its inability to complete exploration wells while, while on the other, saying that it is too costly to account for those conditions when seeking to prevent and respond to spills. Shell cannot have it both ways.

The leases were a bad idea when they were issued. Everything Shell has done since has reinforced that conclusion. And nothing in subsequent events justifies an extension of leases or a modification of their terms.

Still more bad planning by Shell doesn’t justify changing the rules. The Feds should tell Shell, “No.”



UPDATE: The Ninth Circuit threw out a lawsuit by Shell today. Here’s how 9th Circuit Judge Nelson described it:

Shell’s lawsuit represents a novel litigation strategy, whereby the beneficiary of agency action seeks to confirm its lawfulness by suing those who it believes are likely to challenge it. We must decide whether this strategy runs afoul of Article III’s case or controversy requirement. We hold that it does. Shell does not have legal interests adverse to the Bureau under the APA, and it may not file suit solely to determine who would prevail in a hypothetical suit between the environmental groups and the Bureau. Consequently, we lack jurisdiction.

Still more bad planning by Shell.


3 thoughts on “Shell Game: More Poor Planning (Updated)

  1. And somewhere, in a parallel universe, the Alaska Permanent Fund Corporation spun off a hedge subsidiary, pulling off what Shell Oil Company only fantasizes doing in its “Blueprint”and Scramble” scenarios, and, where the carcasses of the Flint Hills refineries moan in the landscape, there was ever only a very happy little cottage co-op having all of about 700,000 members.

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