Details urged on risks offshore

WASHINGTON — A dozen senators are asking the Securities and Exchange Commission to probe whether oil and gas companies are fully disclosing the risks associated with their offshore operations.

In a letter to SEC Chairwoman Mary Jo White, the senators say the companies aren’t telling shareholders the gritty reality of their oil pursuit, including the potential environmental and financial costs of work in the Arctic Ocean and other frontier areas.

“These activities carry significant risks,” the senators wrote. “Because of the inherent risks to investors, the environment and the climate stemming from offshore and Arctic drilling ... full and timely disclosure of material risk is necessary.”

The letter, led by Sen. Ben Cardin, D-Md., builds on a separate missive from House lawmakers last month and a petition filed with the SEC in April. ‘Protect investors’

The senators asked the SEC to review the disclosures of all companies currently drilling or planning to drill for oil in the Gulf of Mexico and the Atlantic, Pacific and Arctic oceans — “and take necessary action to protect investors and maintain the integrity of the market.”

Although their request is broad, the senators focused most of their attention on Shell Oil Co.’s Arctic drilling campaign, arguing that problems during the company’s 2012 efforts illustrate the difficulties of drilling in the remote region and the potential costs when things go wrong.

For instance, Shell was forced to scrap its Kulluk drilling rig and take a $200 million writedown after the vessel ran aground on an Alaska island in 2012.

“Shell’s efforts to drill exploration wells in 2012 resulted in a series of equipment failures, legal violations, fines and, ultimately, the grounding of the Kulluk drill rig,” the senators said. “Despite these realities, Shell has provided investors with boilerplate generalities about the potential for an accident and insisted the company has a sufficient plan for response and cleanup.”

Shell has been boring a new well in the Chukchi Sea for nearly three weeks and just won the Interior Department’s approval to drill even deeper at the site into potential oil- and gas-bearing zones. Democratic senators

The Democratic senators who signed on to the letter, including Sheldon Whitehouse of Rhode Island, Jeff Merkley of Oregon and Barbara Boxer of California, oppose offshore drilling — a position they disclose to the SEC.

But Cardin said it’s essential to fully understand the potential costs of oil spills and equipment failures since offshore exploration is underway.

“If we are going to drill, we need the utmost transparency and risk assessment ahead of any activity,” Cardin said in a statement.