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Petroleum industry

Congressional Leaders Question Shell's Disclosure of Risks in Arctic Drilling Operations

Strategic Insights

— 2 min read

U.S. congressional leaders are expressing concern over the transparency of companies like Royal Dutch Shell in disclosing the risks associated with arctic oil and gas drilling operations. The issue has come to the forefront following the federal government's limited consent for Shell to begin drilling off the coast of Alaska earlier this month. Ranking members of the House of Representatives Committees on Natural Resources and Financial Services have issued a letter to the Securities and Exchange Commission (SEC) seeking a review of corporate financial disclosures by oil and gas companies with offshore operations, particularly in arctic waters.

Key Takeaways:

  • The letter to the SEC, signed by Rep. Raul Grijalva (D-Ariz.) and Rep. Alan Lowenthal (R-Calif.), expresses concerns about the transparency of companies like Shell in disclosing risks associated with arctic oil and gas drilling operations.
  • The lawmakers argue that full disclosure of risk is essential for good decision-making by the public and without it, markets cannot function properly.
  • Shell's early efforts off the coast of Alaska were plagued by equipment issues, and recent federal permits excluded drilling into oil-bearing zones due to a lack of safety equipment.
  • Despite concerns from environmental groups like Greenpeace, Shell is pushing forward with its arctic drilling campaign, citing the high bar that stakeholders and regulators expect of an arctic operator.
  • Erik Milito, director of exploration and production for the American Petroleum Institute, testified before the House in June that exploiting arctic reserves should be a national priority.
  • Michael LeVine, senior counsel on the Pacific region for advocacy group Oceana, expressed concerns in an emailed statement that Shell's arctic ambitions should be a concern to investors and regulators alike.

Statistics:

  • The letter to the SEC was signed by Rep. Raul Grijalva and Rep. Alan Lowenthal.
  • The federal government granted limited consent for Shell to begin drilling off the coast of Alaska earlier this month.
  • Shell's early efforts off the coast of Alaska were plagued by equipment issues.
  • Recent federal permits for Shell excluded drilling into oil-bearing zones due to a lack of safety equipment.
  • The capping stack, a critical piece of safety equipment, has been repaired and is on its way to the drilling site.
  • The Dutch supermajor (Shell) is moving forward with offshore Alaska efforts that will address the high bar that stakeholders and regulators expect of an arctic operator.

Sources:

  • UPI, "Congressional Leaders Question Shell's Disclosure of Risks in Arctic Drilling Operations"
  • House Committee on Natural Resources, Letter to the SEC from Rep. Raul Grijalva and Rep. Alan Lowenthal (July 31)
  • The Hill, "Lawmakers question Shell's disclosure of risks in Arctic drilling"
  • American Petroleum Institute, Testimony of Erik Milito before the House (June)
  • Oceana, Email statement from Michael LeVine (July 31)
  • Washington Post, "Shell's Arctic drilling plans face opposition from lawmakers and environmental groups"

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