Grounded Shell oil rig left Alaska harbor to avoid paying taxes, says official

A Royal Dutch Shell drilling rig that ran aground on an Alaskan island had left its port so the company could avoid paying taxes, a Shell official said.

“Our preference for the timing was to be gone before the end of the year, driven by the economic factors,” Sean Churchfield, the oil giant’s Alaskan operations manager, said in testimony Saturday during a Coast Guard hearing on the incident.

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Shell faced the prospects of putting down millions of dollars in taxes if its Kulluk rig remained stationed at Alaska’s Dutch Harbor, Churchfield explained, according to the Anchorage Daily News.

That prompted the company to send the Kulluk out to sea last December, when a winter storm sent the rig careening into a small island near Kodiak Island in the Gulf of Alaska.

The statements from Saturday contradict ones Churchfield made the day after the Kulluk crash, in which he said tax issues played no part in the rig’s departure from Dutch Harbor.

The Kulluk crash was one in a series of Arctic mishaps for Shell, which later decided to abandon drilling in the region this year. The firm also had experienced equipment problems that delayed its plans to begin drilling last year.

Shell's issues led to an Interior Department review of its planning and practices. That culminated in a comprehensive April report outlining ways to better manage drilling in the Arctic.

Green groups have used those incidents to urge President Obama to block Arctic drilling, calling it too dangerous. They say miscues could devastate sensitive wildlife habitats and the livelihoods of native tribes.

The Obama administration, though, has responded to the events by issuing new warnings to firms wishing to drill in the Arctic — while still maintaining a goal of developing the area’s hydrocarbons.

The White House outlined a broad strategy for Arctic drilling earlier this month. It included calls for better planning by drillers for the region’s harsher conditions and also for bolstering infrastructure in the relatively undeveloped Arctic frontier.