(CN) - Royal Dutch Shell may be misleading investors with "inflated claims regarding its technology and readiness to drill in Alaska's Arctic," the Center for Biological Diversity told the Securities and Exchange Commission.
Such misstatements might lead investors to think that Shell is "not exposing itself to the huge liability BP faced as a result of the Deepwater Horizon disaster," according to a letter authored by CBD oceans director Miyoko Sakashita.
"There is little to no proven oil spill response capacity in the Arctic and no effective recovery technology for broken ice conditions," Sakashita added. "Against this backdrop, Shell has made statements about its investments and technology that appear contradictory to other available information."
Shell told investors that its drill ship, the Kulluk, could drill relief wells in the Chuckchi Sea if a loss of well control occurred there. But a petroleum engineer who visited the Kulluk said the ship was not in "drill ready condition," according to a letter that the center claims to have obtained from the mayor of Alaska's North Slope Borough.
Noting a major overhaul, Shell says the Kulluk has been ready to drill relief wells as needed since March 2010. Susan Harvey, the petroleum engineer, allegedly counters that her March 2011 tour proved that "the Kulluk was not in drill-ready condition and most of the major upgrades announced were not completed."
She went on to say that the Kulluk does not have blowout preventors, that its control panel has not been updated in 28 years, and that important equipment on board suffers from corrosion.
A Shell spokesman rejected the claims. "Shell would not consider bringing a drilling rig to the Arctic that was not fully capable of operating safely," Shell spokesman Curtis Smith told Courthouse News.
Smith says Harvey's report was not prepared by a government agency,, "nor was it an accurate depiction of the Kulluk's readiness to drill a relief well in 2011 in the very unlikely event it was ever called upon."
The Kulluk has been undergoing planned modifications in Seattle in preparation for drilling this year, according to Shell. Smith said experts such as the U.S. Coast Guard will evaluate the ship's readiness before it is redeployed to Alaska.
Earlier this year the Bureau of Safety and Environmental Enforcement approved Shell's oil spill response plans for drilling in the Beaufort and Chukchi Seas, off the North Shore of Alaska.
In approving the Beaufort Sea plan, the bureau directed Shell to substantially rewrite original plans and emphasize its ability to "mobilize and sustain a massive response over an extended period of time" in the event of a spill.
On its website Shell says that oil-spill-response vessels will be in the vicinity of any drilling activity. It also says a tanker for storing recovered oil can be on-site within 24 hours, and that smaller, more rapidly deployable ships and barges can be brought in until the tanker arrives.
The environmental group questions Shell's assumption that it could recover 95 percent of any spilled oil in the Chukchi Sea. "This assumption bears no resemblance to actual mechanical recovery rates," the letter states. "In the Deepwater Horizon spill response, only 3 percent of the spilled oil was mechanically recovered."
Shell says that well-capping technology has improved in the wake of the Deepwater Horizon disaster, allowing for faster response times to similar mishaps.
Sakashita, the nonprofit's oceans director, cited a February report by the Government Accountability Office in questioning this claim.
"The report noted that while capping capacities have been strengthened in the Gulf of Mexico, Arctic conditions could render Shell's reliance on similar technology insufficient," Sakashita said.
A containment system might become clogged or damaged by ice on the sea floor, according to the report.
Sakashita urged the SEC to investigate Shell's statements and "require Shell to provide accurate and complete information to the public and its investors about its dangerous Arctic proposals."