An ice-strengthened oil drilling vessel, the Kulluk, which Shell decided to scrap after it drifted aground while being towed. Credit: Day Donaldsen
The day after a coalition of state and national environmental organizations vowed to stop Seattle from becoming the home port for Shell's Arctic drilling rigs, Shell's CFO announced it will pursue a drilling program in Alaska's Chukchi Sea this year.
In an earnings call late last week, Shell's CFO Simon Henry, noted that the drilling is "subject to getting permits and legal clearance." And in an email, company spokesperson Curtis Smith added, the company officials would act only if they have "complete confidence that we can execute a program safely and responsibly."
While the timing appears coincidental, the coalition, citing significant environmental impacts and a lack of public process, has called on the Port of Seattle to reconsider recent plans to lease Terminal 5 to Foss Maritime. The lease with Foss, a local marine transport company, would facilitate Shell's quest to resume drilling in the Arctic by providing transport services needed to operate in a warm water port near Alaska. One of Shell's drilling rigs, the Noble Discover, is currently in a South Korean shipyard for repairs.
“There's one alternative to the Port of Seattle,” said Peter Goldman, a member of the coalition and attorney with the Washington Forest Law Center, “and that's in Dutch Harbor, Alaska, not Everett, not Tacoma.” He said 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 oil drilling equipment in the state of Alaska.”
Goldman says he believes in a strong and robust port, but argues the Port's consideration of the Foss lease “was made under the cover of a confidential, non-disclosure agreement behind closed doors and without any meaningful public input.”
Two weeks ago, Port executives disclosed their intention to lease Terminal 5 to Foss and Shell at a public meeting of the Port Commission. Three of the five commissioners gave the green light to the decision, while two asked for more time for public input and closer scrutiny. Foss spokesperson Paul Queary with Strategies 360 said in an email that when Terminal 5 became vacant last summer, the company brought the opportunity to three of its major customers, one of them Shell. Queary says Foss has conducted continuous operations in Alaska and the Arctic for more than 70 years.
Commissioner Courtney Gregoire was one of the two commissioners who voted for closer scrutiny and public input. During the public meeting she said the Port's mission of “being the green gateway where a sustainable world is headed,” was in conflict with the Shell project. Prefacing her remarks with praise for the Port's commitment to grow the maritime sector and middle-class jobs, Gregoire said she disagrees with those who believe commissioners have no authority when it comes to drilling in Alaska. “I don't accept that as a public agency. We are actually responsible for stewarding our public assets for the public good.”
Calling herself a fierce advocate for the Puget Sound maritime community, Gregoire said the Port's values were inconsistent with drilling in the Arctic which would further climate change and likely result in oil spills in the sensitive Chukchi Sea. “We've had more in-depth conversation about investments in the Shilshole Bay Marina bathroom, than we've done here," she said.
Linda Styrk, managing director of the Port's Seaport Division, said the Port had been "prospecting for a long time” for an interim use for Terminal 5. Until last summer, American President Lines had been leasing the terminal. Revenue was roughly $20 million a year.
During the commission hearing in which Commissioners Gregoire and Tom Albro asked for more public input and scrutiny, Styrk said she is excited by the lease because “it would generate hundreds of seagoing merchant marine jobs –U.S. merchant marine jobs.
“And those are harder and harder to come by,” she said. Styrk did not respond to a request for further comment, but the Port's PR team said the Shell lease has the potential to create hundreds of family-wage jobs — including stevedore terminal jobs, new administrative and management jobs — as well as generating millions of dollars in revenue for the region.
Jobs are also on the minds of the coalition of environmental organizations calling on the Port to reconsider its lease with Foss Maritime facilitating Shell's Arctic drilling. They urge the Port to find a tenant who will create “high-quality, sustainable jobs that reflect the region's values.” K.C. Golden, policy director at Climate Solutions and interim board director of 350.org, says, “Our region and the Port's economic future is not an oily future at the bottom of the Arctic Ocean.” He also made it a point to emphasize that “doing the right thing on climate change” is as much a local action as a global one. The belief that global climate policy is beyond local consideration, says 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.”
Whether Shell receives permission to return to the Arctic depends on federal regulators and several legal hurdles. The Obama administration recently released an initial draft proposal for leases they planned to offer on the Continental Shelf in the five-year time cycle beginning in 2017. The Arctic was put back into the lease plan. But, according to John Deans with Greenpeace, “In the short term, in particular for 2015, it's not clear whether or not the Obama administration is going to allow Shell to try and make good on its current leases.”
Shell tried to mount an expedition to the Arctic in 2014 but canceled its plans after an appeals court said the environmental impact statement conducted by the Bureau of Ocean Energy Management was inadequate. Last fall, the Bureau released a draft EIS, currently under review, after almost a million people asked for Shell's lease to be denied, according to Deans. The Department of Interior, which oversees the Bureau, is expected to issue a final decision in late February.
On the Seattle front, Earthjustice, a law group representing the coalition, is raising legal questions, faulting the Port for entering into a lease with Foss Maritime without complying with the State Environmental Policy Act. The critical question, says Northwest Managing Attorney Patti Goldman, is whether Foss's proposed uses of Terminal 5 are “essentially the same” as the prior terminal operations, American President Lines. It's a question Port of Commissioners are being asked to reconsider.
Goldman says the discharge of oil from vessels and toxic pollution from vessel maintenance are particularly harmful to salmon. Terminal 5 is located near the mouth of the Duwamish River, habitat to Puget Sound Chinook, which are listed as threatened under the Endangered Species Act.
The coalition's leaders said they want the Port of Seattle commissioners to respond to their concerns by Feb. 9.