The Shell-owned drilling unit Kulluk, which grounded off the Alaskan coast, near Sitkalidak Island on the north edge of Ocean Bay, on 31 December 2012. USCG via

By Tom Bawden  
4 January 2013

(The Independent) – Shell’s ill-fated attempt to tow an offshore oil rig from Alaska to Seattle in the final days of December was motivated by a desire to avoid $7m (£4.3m) of Alaskan state taxes, it emerged today.

But the oil giant will instead suffer a multi-million dollar loss on the exercise after the rig ran aground off the Alaskan coast on Monday night.

The rig was beached during a violent storm on its way to a Seattle shipyard for routine maintenance, in a round-trip timed so that, thanks to an accounting loophole, Shell could avoid an Alaskan state tax.

However, because the rig ran aground late on New Year’s Eve and began 2013 within three miles of the Alaskan coast, Shell remains liable for a unique state property tax on equipment dedicated to oil and gas development and exploration.

Shell admitted today that its decision to move the rig, the Kulluk, just weeks after it was brought to the Gulf of Alaska in November, was motivated by financial considerations.

“It’s fair to say that the current tax structure related to vessels of the type influenced the timing of our departure. It would have cost Shell multiple millions to keep the rigs here,” a Shell spokesman said.

Another Shell spokesman, in London, said: “While we are aware of the tax environment wherever we operate, the driver for operational decisions is always governed by safety. In this case, what mattered most to Shell was the two-week window of favourable weather that was forecasted for that journey.”

He denied suggestions that the routine maintenance and inspection could have been carried out in Alaska.

David Gregory, a councillor for the city of Unalaska, said Shell’s equipment tax bill would come to between $6m and $7m, adding: “Maybe they should have just stayed there.” [more]

New twist in stricken rig saga: Shell was moving it to avoid tax

By Eoin O'Cinneide 
3 January 2013

Salvage experts have been on board the Shell-owned drilling unit Kulluk, which remains grounded off the Alaskan coast.

A team of five personnel was airlifted to the unit by a US Coast Guard helicopter at around 10:30 local time on Wednesday morning. Authorities had previously stated the team consisted of six personnel.

The experts from Smit Salvage conducted an initial assessment of the situation lasting around three hours before they were once again taken off board.

The USCG said it had also airlifted a state-owned emergency towing system to the unit to be used during salvage operations.

Authorities had been waiting for a break in severe weather conditions to be able to drop an assessment team onboard the Kulluk which grounded a short distance from shore off Sitkalidak Island on the north edge of Ocean Bay on Monday night.

The vessel remains grounded on sand and gravel but to date there is no sign of pollution or even wildlife response.

Shell had previously disclosed that the Kulluk is currently holding up to 150,000 gallons of ultra-low sulphur diesel and about 12,000 gallons of combined lube oil and hydraulic fluid on board. [more]

Salvors board stricken Kulluk


  1. rpauli said...

    Thanks Des for this post, I never would have seen this otherwise.

    I only wish we had the identities of the blundering fools inside of Shell.

    Were they the same fellows who decided that building a rig for 25 foot seas was cheaper than the required 30 foot seas? I think so.

    As long as our world continues to protect and reward failure, there is no chance of change.  


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