CFO announced it will pursue a drilling program in Alaska’s Chukshi Sea this year. (Photo: O.F.E)
Can a coalition of national and state environmental organizations that has vowed to stop Seattle from becoming the home port for Shell’s Arctic oil drilling rigs send a message to the oil industry?
“Hell yes,” said Peter Goldman, a member of the coalition and attorney with the Washington Forest Law Center. “They know what’s going on here. If we make it more expensive for them to operate by denying them the city of Seattle, we are essentially pushing the tipping point over to the point of no return to where they’re going to go away and not come back.”
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While the timing appears coincidental, a day after the coalition held a press conference on Seattle’s waterfront, Shell’s CFO announced it will pursue a drilling program in Alaska’s Chukshi Sea this year. In an earnings call late last week, Shell CFO Simon Henry noted that the drilling is “subject to getting permits and legal clearance.”
Company spokesperson Curtis Smith added in an email, Shell would act only if it has “complete confidence that we can execute a program safely and responsibly.”
Citing significant environmental impacts and a lack of public process, the coalition has called on the Port of Seattle to reconsider recently announced plans to lease a terminal to Foss Maritime. The lease with Foss, a local marine transport company, would facilitate Shell’s quest to resume drilling by providing transport services needed to operate in a warm-water port near Alaska.
Port executives shared their intentions at a hearing in mid-January. Three out of five commissioners gave the green light to the decision, while two asked for closer scrutiny and time for public input. Foss spokesperson, Paul Queary with Strategies 360, acknowledged later that when the terminal became vacant last summer, the company brought the opportunity to three of its major customers, one of them, Shell.
“There’s one alternative to the Port of Seattle,” said Goldman with the coalition, “and that’s in Dutch Harbor, Alaska. He said that Shell has a huge incentive to move its rigs to Seattle because the logistics of operating out of Dutch Harbor are staggering: extremely rough weather, access, parts, labor. “There’s also a 1 percent tax on drilling equipment in Alaska.”
Shell’s last attempt at Arctic drilling took a dramatic turn in December 2012, when one of its rigs, the Kulluk, was lost in the Gulf of Alaska, eventually grounding off Kodiak Island. “They were racing out of Alaskan waters to avoid millions of dollars in taxes they’d have to pay in the new year,” John Deans with Greenpeace said. “The gamble cost them a rig and nearly cost them the lives of 11 crew members.” The New York Times published an article late last year recounting the myriad ways in which Shell cut corners on safety in its Arctic drilling operations.
Another drilling rig Shell employed in the Arctic that year, the Noble Discoverer, is in a South Korean shipyard for repairs, while a new rig, the Polar Pioneer, is in the South China Sea near Singapore. “We expect they’ll be moved to the Port of Seattle by Spring if the approved lease is signed,” Deans said. Greenpeace estimates Shell has spent over $6 billion to secure leases and equipment and fend off lawsuits since they started to pursue drilling in the Arctic fourteen years ago. Shell originally purchased leases in 2001 but put them back on the market in 2004. In 2008, Shell bid for a lease again during the waning hours of the Bush administration. The leases were immediately challenged by environmentalists, and by some who live on the Arctic slope, says Deans. Subsequent lawsuits and appeals have followed ever since.
In the earnings call that Shell CFO Simon Henry made with shareholders last week, he said the company was “keeping overall spending on conventional exploration flat again . . . at 2014 levels . . . at around $4 billion. This means, he added, “spending outside of Alaska will be less than $3 billion in 2015.” It would also require deferrals in drilling in the Gulf of Mexico, China offshore and Malaysia, he said.
Shell tried to mount an expedition to the Arctic in 2014, but canceled plans after an appeals court said the environmental impact statement/EIS conducted by the Bureau of Ocean Energy Management was inadequate.
Last Fall, the bureau released a new draft EIS after nearly a million people weighed in asking for Shell’s lease to be denied, according to Deans with Greenpeace. The Department of Interior, which oversees the bureau, is expected to issue a final decision in late February.
The Obama administration recently released a draft proposal for new leases it planned to offer on the Continental Shelf in the five-year cycle beginning in 2017, with the Arctic back in the lease plan. But in the short term, says Deans, it’s not clear whether or not the Obama administration will allow Shell to try and make good on its current leases.
On the Seattle front, the coalition that has vowed to stop the Port of Seattle from leasing a terminal to Shell and marine transport company Foss Maritime says it’s time to stop doing business as usual.
“We’re not going to be the place that stages the terminal fossil fuel dependence that literally plunges us into climate chaos,” says KC Golden, senior policy adviser with Climate Solutions, a Northwest-based clean energy economy nonprofit.
“You think its remote; you think it’s only for a little while,” he said, referring to Arctic drilling, “but this is how the fossil fuel economy keeps on chugging and locks us into a future of hell and high water from disruptive climate change and that’s the future we won’t stand for.”
The belief that global climate policy is beyond local consideration, said Golden, “is the oil industry’s way of telling us we have no say in the matter and that’s what we’re objecting to. The Port of Seattle and people of Seattle may not control everything, he adds, but “we can do the right thing in our own jurisdiction.”
Earthjustice, a law group representing the coalition, has given Port of Seattle commissioners until February 9 to reply to concerns. They also fault the port for not complying with the State Environmental Policy Act (SEPA), which is required when leasing real estate property for new use.
The critical question, said Northwest managing attorney Patti Goldman (no relation to Peter Goldman), is whether Foss’ proposed use is “essentially the same” per SEPA law, as the prior terminal operations. American President Lines leased the terminal until last summer. It’s a question the coalition is asking Port Commissioners to reconsider, along with taking a closer look at the Port’s stated mission of “being the green gateway where a sustainable world is headed.”