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Shell Says Tax Played Role in Move of Drilling Rig That Grounded

Jan 11, 2013
(Bloomberg)

Avoiding a state tax played a role in Royal Dutch Shell Plc (RDSA)'s decision to move a drilling rig from Alaska waters, though the company said the vessel’s grounding days later was the result of an unforeseen worsening of weather.

The Kulluk broke free from its tugboat in stormy seas on Dec. 31 and ran aground on an uninhabited Alaskan island, another embarrassment for a company that has spent $4.5 billion and seven years in pursuit of oil beneath the Chukchi and Beaufort seas in the Arctic Circle.

A Jan. 1 tax assessment was "a consideration," in the timing of the rig's move, Curtis Smith, a Shell spokesman, said in an e-mail. However, that was "not among the main drivers for our decision to begin moving the Kulluk,”" he said. It was being towed from Dutch Harbor, Alaska, to a shipyard in Seattle for maintenance.