Economic factors tied to Shell's Kulluk move

May 29, 2013 at 8:09 AM

WASHINGTON, May 29 (UPI) -- "Economic factors" drove Royal Dutch Shell to move the Kulluk oil rig from Dutch Harbor, Alaska, in December before it struck ground, an official said.

Kulluk ran aground off Alaska while being towed to Seattle in December. The grounding followed a 2012 exploration season in the arctic waters of Alaska that was complicated by equipment failures and extreme weather.

Royal Dutch Shell Operations Manager Sean Churchfield testified before U.S. Coast Guard authorities that the tow was timed to avoid "millions" of dollars in taxes.

"Our preference for the timing was to be gone before the end of the year, driven by the economic factors," he was quoted by the Anchorage (Alaska) Daily News as saying.

The newspaper reported that Churchfield said the day after the December grounding the decision to move the drillship from Alaskan waters wasn't driven by pending state tax liability.

The U.S. Interior Department said Shell went ahead with plans last year even though it lacked key components of its drilling program. The department said there were weaknesses in the way Shell managed contractors, which the government said led to many of the company's problems.

Shell in February announced it was suspending its exploration campaign for 2013 to ensure its equipment and personnel are ready to proceed safely.

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