U.S.: Shell risked moving drill ship in storm to avoid paying millions in taxes

It seems the Shell Oil Company decision to move the oil drilling platform ship, Kulluk, to Seattle was corporate greed to try and avoid paying Alaskan State taxes. If the rig was in Alaska on January 1st, about $6 millions of taxes would be due to the state of Alaska.

It shows that companies are not committed to the state where they may operate but move their assets globally, or from state to state to avoid taxes and fees. The company risked moving the drilling rig despite hurricane like Arctic storm conditions with high seas and high winds, putting at risk their asset and the lives of their workers.

A unified response command dealing with the Kulluk Tow Incident has been established , composed of the US Coast Guard, Shell Corporation, Alaska Department of Environmental Conservation, Noble Drilling Contractor, and Kodiak Island Borough.

Here is an excerpt from an article by Jim Paulin and Carey Restino dated Jan 03, 2013 from the Alaska Despatch: Shell hoped to save millions in taxes by moving now-grounded drill rig out of Alaska

    A Shell spokesman last week confirmed an Unalaska elected official’s claim that the Dec. 21 departure of the Kulluk from Unalaska/Dutch Harbor involved taxation.

    City councilor David Gregory said Shell would pay between $6 million and $7 million in state taxes if the Kulluk was still in Alaska on Jan. 1.

    Shell’s Curtis Smith said in an email last week that the decision involved financial considerations. The rig had been moored in the Aleutian Islands port following several months on an oil exploration project in the Arctic

    “We are now planning to sail both vessels to the west coast for seasonal maintenance and inspections. Having said that, it’s fair to say that the current tax structure related to vessels of the type influenced the timing of our departure,” Smith said. “It would have cost Shell multiple millions to keep the rigs here,” he added, though he didn’t have an exact amount.

    Gregory said the departure of the Kulluk took money away from local small businesses servicing the rig. He predicted the maritime mishap will prove very costly to the oil company.

    “It will cost them more than that $6 million in taxes. Maybe they should have just stayed here,” Gregory said.