Sometimes years of work come down to one moment. This happened on Monday, when Oceana and the University of Chicago Abrams Environmental Law Clinic filed a petition with the United States Securities and Exchange Commission (SEC) requesting an investigation into Royal Dutch Shell’s disclosures about the company’s plans to drill for oil in the U.S. Arctic Ocean. Shell’s plans for the Arctic Ocean are risky and expensive—potentially costing investors billions of dollars—and they take a gamble with the health of one of the most fragile and important ocean ecosystems in the world. The company has presented shareholders and investors with what appears to be a misleading picture of the prospects and risks of exploratory drilling in the Arctic.
Such drilling comes with the real risk of catastrophic accident. A spill of the magnitude of 2010’s Deepwater Horizon in the Arctic Ocean would devastate sensitive ocean ecosystems and the communities that depend on them and cost Shell tens of billions of dollars. Ice, weather, darkness, and the lack of infrastructure in the remote and dangerous Arctic would make clean up especially difficult. Shell knows these risks well. Its last efforts to drill in the Arctic Ocean resulted in a series of mishaps, culminating in the grounding of its drill rig, the Kulluk. And yet Shell has provided its investors only boilerplate generalities about the potential for future accidents and insufficient plans for response.
Shell has also failed to address successful court challenges brought by Alaska Native entities, local government bodies, and conservation organizations that have identified serious problems with the government’s analysis of the potential impacts of Arctic Ocean leasing and drilling. In a letter to the Department of the Interior, the company calls these cases justification to have its leases extended. Investors deserve the full story.
Fair and full disclosure of risks is an important part of good decisions about ocean resources, and the law requires companies like Shell to do their part. With better information, including proper corporate disclosures, shareholders, government agencies and the public might insist that Shell wait rather than rush ahead. A formal investigation by the SEC is a step toward fostering a more fully informed debate and consideration about whether and under what conditions resource extraction could occur in the U.S. Arctic Ocean. Oceana asks the SEC to take action and investigate Shell.