Shell Fights to Prevent the Release of Arctic Drilling Audit

by Tim Donaghy

June 17, 2015

Shell Oil is fighting to prevent the public release of an audit of their Arctic drilling operations. Earlier this month, in response to Greenpeace’s Freedom of Information Act (FOIA) request, Shell argued to government regulators that the entire document is “confidential business information” and should be kept from the public.

At a moment when its Arctic ambitions have sparked massive protests in Seattle, Canada and around the world, Shell is no doubt sensitive to bad press, especially with regards to its past screw-ups. However, given this high level of scrutiny, the public should have had access to this document months ago, in time to incorporate its findings into the brief public comment period on Shell’s Exploration Plan (which closed May 1, 2015).

With Shell’s fleet already heading north to Alaska, the public deserves nothing less than full disclosure on this critical issue.

Activists participate in the sHell No Flotilla part of the Paddle In Seattle protest.  Nearly a thousand people from country gathered May 16, 2015 in Seattle's Elliott Bay for a family-friendly festival and on-land rally to protest against Shell’s Arctic drilling plans.  Photo by Greenpeace

Activists participate in the #sHellNo Flotilla, part of the recent Paddle In Seattle protest. Nearly 1,000 people from all over the  country gathered May 16, 2015 in Seattle’s Elliott Bay for a family friendly festival and on-land rally to protest against Shell’s Arctic drilling plans.

After Shell Oil’s disastrous 2012 attempt at drilling in the Arctic Ocean—which ended with one of its drilling rigs beached on an Alaskan island and eight felony charges related to violations on the other rig—Secretary of the Interior Ken Salazar ordered a review of Shell’s operations to find out what went wrong. The result was a 2013 report that identified a number of flaws in Shell’s project management and oversight of its contractors. The report put forth two concrete requirements to be delivered “before [Shell] is allowed to resume its drilling program in the Arctic.” The first requirement was an Integrated Operations Plan that was finalized and released in late 2013.

The second requirement was a full third party audit of Shell’s Safety and Environmental Management Systems (SEMS). The audit was designed to ensure “that the management and oversight shortcomings identified with respect to all aspects of the company’s 2012 operation have been addressed and that the company’s management structure and systems are appropriately tailored to Shell’s Arctic exploration program.”

What’s a SEMS Audit Anyway?

A SEMS audit assesses the management and operational systems put in place on offshore oil rigs to protect worker safety and the environment. The auditor will typically review documents and procedures as well as conduct interviews and site visits. Some of the topics covered include access to critical information, analysis of potential hazards, operating procedures, safe work practices and worker training.

In early 2014, Shell submitted a plan for the audit to the government agencies that regulate offshore drilling, but Shell paid for the audit and was allowed to handpick the auditor (Houston-based Endeavor Management). It was also disclosed that the audit would be split into two parts. Stage 1 would take place in Shell’s Anchorage, Alaska office and Stage 2 would take place on board the drilling rig Noble Discoverer once it was operating in Alaskan waters.

Kulluk Drill Rig Runs Aground in Alaska

Shell’s previous oil rig, the Kulluk, ran aground in Alaska on New Year’s Eve 2012.

The in-office portion of the audit was completed in 2014 and the audit report was provided to the Bureau of Safety and Environmental Enforcement (BSEE) towards the end of that year. However, this document has never been made public and Greenpeace submitted a FOIA request for its release. (Despite the promise that the audit would be a requirement “before” Shell was allowed to return to the Arctic, Stage 2 has yet to be completed and will presumably happen this summer while Shell is drilling.)

In 2013—following Shell’s 2012 drilling season—BSEE finalized a regulation requiring that all offshore oil drilling operations be audited by an accredited audit service provider. Since then, BSEE has released redacted versions of those audit reports through FOIA and has even posted them on its website.

Sunlight Is the Best Disinfectant

Shell remains committed to drilling in the Chukchi Sea this year despite a rising tide of protests against its drilling rigs and support ships. Government analysis found that there was a 75 percent risk of a large oil spill should the Chukchi Sea leases be developed. Recent studies have found that harsh Arctic conditions would make it impossible to clean up an oil spill. What’s more, the world can’t afford to burn Arctic oil if we want a chance at limiting global warming to 2 degrees Celsius and avoiding the worst impacts of climate change.

Government data show that oil spills, fires, explosions, loss of well control events, and worker injuries and fatalities remain far too common in the oil industry. Certainly, Shell’s 2012 campaign lends no confidence that the oil giant can competently manage the unique risks of drilling in the Arctic. But thus far we have only public statements from Shell officials stating the audit found no issues and that they have learned the lessons of 2012.

The decision to release or redact this document is currently in the hands of Interior Department lawyers. We call on BSEE to release the third party SEMS audit in its entirety. Shell Oil may reap the benefits of oil production in the Arctic, but it’s the inhabitants of Alaska’s North Slope—as well as the wildlife in the Chukchi Sea—who bear the risks of an oil spill.

The public deserves to have access to this information.

Tim Donaghy

By Tim Donaghy

Tim Donaghy is a Senior Research Specialist with Greenpeace USA. He writes frequently about climate change, offshore oil drilling, energy production, and the Arctic.

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