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Congress asks Shell about tax dodge statement before Kulluk grounding

Katie Medred
Ocean Bay on Sitkalidak Island in Alaska, located close to Kodiak Island's southeast shore.
Stacy Studebaker, Kodiak Audubon Society photo
A night shot of the workers and equipment showing a markedly armored containment dome to replace the one which suffered a catastrophic failure in September 2012 during the initial testing process in calm, predictable conditions in the Salish Sea off of Anacortes, WA. Note the lateral ribs surrounding the upper portion of the dome as well as the outer steel plates to protect the dome from damage and enhance the strength of the structure to the pressures of ocean depths.
TJ Guiton
The west end of Sitkalidak Island's shore Ocean Beach, where shoals are visible beneath the waves. Sitkalidak Island is located near Kodiak Island, Alaska.
Creative Commons photo via Ground Truth Trekking
Shell Oil tests their "capping stack" in Everett, Washington on June 25, 2012.
Courtesy Shell Oil
A Coast Guard MH-60 Jayhawk helicopter crew evacuates 18 crewmen from Shell Oil's drilling ship Kulluk in 15 to 20-foot seas, 80 miles southwest of Kodiak, Alaska, on Dec. 29, 2012.
Coast Guard photo
Shell Oil's spill response gear staged in Wainwright. Summer 2011.
Ben Anderson photo
A Coast Guard HC-130 Hercules aircraft from Air Station Kodiak overflies the tugs Aiviq and Nanuq tandem towing the mobile drilling unit Kulluk 116 miles southwest of Kodiak City, Alaska, Sunday, Dec. 30, 2012. The tug Alert from Prince William Sound and the Coast Guard Cutter Alex Haley from Kodiak are en route to assist.
US Coast Guard photo
Greenpeace boat crew protest at Shell drill ship Noble Discoverer anchored near Dutch Harbor, Unalaska, Alaska. August 5, 2012
Jiri Rezac / Greenpeace
Royal Dutch Shell's Kulluk drillship in the Beaufort Sea in fall 2012.
Royal Dutch Shell photo
Fennica, a Finnish icebreaker contracted to Shell's Arctic project, in Dutch Harbor, Alaska.
Shell photo
Curtis Smith, spokesperson for Shell Oil. June 1, 2012
Loren Holmes photo
The anchor-handling vessel, the Alert, tows the drilling unit Kulluk to a safe harbor location in Kiliuda Bay, Alaska on Jan. 7, 2013. Photo by U.S. Coast Guard Petty Officer 3rd Class Jonathan Klingenberg.
US Coast Guard photo
Shell Oil's Kulluk platform, in Seattle, May 25, 2012.
Courtesy Senator Begich's office
The drilling unit Kulluk, towed by the anchor-handling vessel Aiviq, heads to its safe harbor location in Kiliuda Bay.
Courtesy Shell
Shell's Aiviq support vessel in Dutch Harbor, Alaska.
Shell photo
The drilling unit Kulluk, towed by the anchor-handling vessel Aiviq, heads to its safe harbor location in Kiliuda Bay.
Courtesy Shell
Shell Oil Alaska vice president Pete Slaiby listens to David Hayes, deputy secretary of the U.S. Department of the Interior, speaking at the Arctic Imperative Summit. August 26, 2012
Loren Holmes photo
The Kulluk drill rig near Sitkalidak Island off Kodiak
USCG photo
Royal Dutch Shell has already begun studying land and sea features to determine the best route and depth to place at least 400 miles of pipelines that can carry crude oil to the trans-Alaska pipeline. The company is considering several options across a wide swath of ocean and tundra. This map was created to provide a general idea of the direction those pipelines will take.
Aaron Jansen illustration
The Kulluk drill rig off Kodiak Island on Jan. 2, 2013
USCG photo
The Shell drilling vessel Noble Discoverer came close to shore in Unalaska on Saturday, July 14.
Kristjan B. Laxfoss photo
Shell Oil's drill rig Kulluk, grounded off Kodiak Island by an Arctic storm it was supposed to be built to withstand
Shell Oil's 514-foot drill ship Noble Discoverer sits 68 miles west of Nome on Aug. 29, 2012.
U.S. Coast Guard photo
Royal Dutch Shell's drilling ship, the Kulluk, grounded at remote Sitkalidak Island in Alaska on Jan. 1, 2013.
Coast Guard Petty Officer 1st Class Sara Francis footage
Shell Oil's exploratory drilling platform departs Seattle for Alaska on June 27, 2012.
Courtesy Vigor Industrial
Waves crash over the mobile offshore drilling unit Kulluk where it sits aground on the southeast side of Sitkalidak Island, Alaska, Jan. 1, 2013.
U.S. Coast Guard photo
The Arctic Challenger was occupied by Caspian terns while docked in Southern California in 2007.
John Potter / California DFG
Rear Adm. Thomas Ostebo, 17th Coast Guard District commander, Capt. Paul Mehler, federal on-scene coordinator for the Kulluk mishap, and Sean Churchfield, Shell’s incident commander, discuss the situation with Sen. Lisa Murkowski on Jan. 1, 2013.
USGS Petty Officer 1st Class Matthew Schofield photo
The Arctic Challenger, a barge Royal Dutch Shell is renovating to use in Arctic drilling operations.
Courtesy Shell Oil
Approximate location where Royal Dutch Shell's drilling ship Kulluk grounded on Sitkalidak Island, Alaska.
Coast Guard photo via Ground Trekking Truth
The Arctic Challenger with the newly redesigned and repaired Containment Dome move away from the Port of Bellingham, Wash. on Dec. 12. The challenger had been moored since returning in September 2012 after a catastrophic failure of the first iteration of their containment process.
TJ Guiton photo

Problems for Royal Dutch Shell and its $5 billion quest to drill in the Beaufort and Chukchi seas off Alaska's northwest coast escalated Thursday as federal regulators charged the company with air pollution during its brief and troubled exploratory season in the U.S. Arctic and a top Democrat in Congress alleged that tax evasion motivated the company's disastrous decision to tug a mobile oil-drilling rig across the Gulf of Alaska during severe weather.

Shell was forced to abandon the Kulluk to ground off the southern coast of Kodiak Island on New Year's Eve.

Massachusetts Rep. Ed Markey is ranking Democrat on the U.S. House Committee on Natural Resources. On Thursday, Markey sent a letter to Shell Oil president Marvin Odum stating that "conversations with the Alaska office of the National Weather Service (NWS) do not back up Shell's claim" with regards to a weather forecast the company has used to defend moving the Kulluk from Dutch Harbor, an international port in Alaska's Aleutian Islands, south to Seattle.

On Dec. 31, 2012 the Kulluk drifted free after its tug, the Aiviq, first lost engine power and then its connection to the rig.

In an email to the Dutch Harbor Fisherman, Smith confirmed the tax liability. He said it could cost “multiple millions” if the Kulluk was still in Alaska waters on Jan. 1 because of the state of Alaska’s oil and gas property tax, a tax levied on all assets dedicated to oil and gas exploration, transportation and production in Alaska. The tax comes to 2 percent of the assessed value of the property.

Smith backtracked last week, telling Alaska Dispatch that Shell was aware of the tax, but that it wasn't a “strong driver” in determining when the vessels would leave.

"Financial considerations rather than safety may have factored into Shell’s considerations, if true, are profoundly troubling" Markey wrote to Odum.

In the end, Shell will pay. David Mosley, a spokesman for the U.S. Coast Guard, told Bloomberg:

Shell may have to reimburse the U.S. government for some of its expenses related to the recovery of the Kulluk. He declined to estimate the potential costs. Taxpayers will pay for the rescue of 18 people off the Kulluk during the storm, Mosley said.

The Kulluk is now in Kiliuda Bay, Alaska. Read more on Royal Dutch Shell's Kulluk and the Alaska tax evasion theory.