Call for more risk disclosure a shot in offshore barrage

Aug. 31, 2015
Senate liberals made motivations clear when they demanded that the US Securities and Exchange Commission enhance requirements for the disclosure of risks associated with oil and gas drilling.

Senate liberals made motivations clear when they demanded that the US Securities and Exchange Commission enhance requirements for the disclosure of risks associated with oil and gas drilling.

"While we oppose offshore and Arctic drilling because of their [sic] inherent real and potential threat to the fragile surrounding marine ecosystems and the climate, these disclosures help investors make more informed decisions," 11 Democrats and Independent Bernard Sanders wrote in an Aug. 18 letter to the SEC.

Notwithstanding problems of grammar and coherence, the sentence is clear in intent and logic: to discourage investment in offshore oil and gas work because of the twin possibilities of local environmental harm and contributions to global warming.

The letter cites Shell's Arctic drilling campaign off Alaska, where the company recently received long-sought and highly conditional approval to drill into strata thought to hold hydrocarbons.

The letter-writers allege the company hasn't sufficiently warned investors about the risks. How so? The Macondo disaster of 2010 showed tragedies can occur. The grounding in 2012 of the Kulluk drilling unit off Kodiak while under contract to Shell showed heavy equipment can become unruly.

"Despite these realities," the letter asserts, "Shell has provided investors with boilerplate generalities about the potential for an accident and insisted that the company has a sufficient plan for response and clean-up." The letter says response methods haven't been tested in Arctic conditions and might not work as well as Shell says they would.

Signatories worry that other companies "have also failed to disclose similar vulnerabilities." So they want the SEC to review and toughen disclosure requirements for all companies drilling anywhere off the US.

Investors, of course, don't need lists of every imaginable mishap to know complex, mechanical work can go wrong-sometimes, not at all often, tragically and expensively.

But the letter-writers don't really care what investors know. The regulatory change they seek would be another shot in an environmentalist barrage against offshore oil and gas activity. They said so themselves.