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Arctic Oil Development

The Huffington Post, March 21, 2012

Shell's Lawsuit Against Environmental Organizations Courts Disaster

By Carol Pierson Holding

Shell is suing 12 environmental organizations to preempt legal challenges to exploration in the Arctic Ocean. The environmental groups include, among others, the Center for Biological Diversity, the National Audubon Society, Oceana (full disclosure: Oceana is a source for CSRHub ratings) and the Sierra Club. Crazy isn't it, Shell, a $378 billion company, attacking the National Audubon Society? It's a bully image that can only hurt, and Shell should know better because it's happened to them over and over again.

Twenty years after the fact, people are still talking about Brent Spar, the 14,500-ton North Sea oil platform Shell was all set to dump into the Atlantic Ocean until protests inspired by Greenpeace ignited a citizen fury so intense that according to one poll, the oil industry's public acceptance declined from 70 percent in the 1970s to 32 percent in 1996 post-Brent Spar. The protests hurt sales too: Shell gas stations lost sales, as high as 50 percent in Germany.

Another example: in 2004, Shell took a serious hit to its reputation when it overstated its oil reserves, screwing its shareholders and government allies, and was forced to restructure. New management began addressing its environmental mistakes with gusto. CEO James Smith led the company to invest in renewable energy sources such as plant-based biofuels and offshore wind energy, embodying a caring, environmentally friendly image. (Shell has since pulled out of all alternative energy projects except biofuels.)

Under Smith's watch, Shell also cleaned up its legal messes. In 2009, the company settled legal cases in Niger stemming from the 7,000 oil leaks from pipes installed starting in the 1960s. The pipes had life-spans of only 20 to 25 years. Shell also settled a case charging them with collaborating with the Niger military to kill environmental activists who led the protests.

That same year, Shell settled a case in California over leaks in gas storage tanks at its stations. Shell had "disregarded the state's underground fuel storage and hazardous waste laws," as California Attorney General Jerry Brown stated.

So confident was Shell that it had cleaned up its image that when the BP oil spill happened in April 2010, Shell launched an aggressive campaign to claim the alternative energy positioning once owned by BP/Beyond Petroleum. As reported in Ad Age:

"The effort touts the dawn of a future that will be powered by new and multiple energy sources and cleaner fossil fuels that Shell is 'unlocking.' It also expresses the notion the world will soon be on the road to sustainable mobility and that Shell is 'ready to help tackle the challenges of the new energy future.'"

With this new lawsuit against environmental organizations, Shell believes that it has found a way at last to forestall consumer activism. Really? The Arctic has become a symbol of unspoiled nature. Nature series run specials on the Arctic. Polar bears are beloved.

Greenpeace has already geared up to repeat its success with Brent Spar.

What led Shell on this foolhardy course? Perhaps it is well aware of its vulnerabilities. As noted by Oceana's advisor Whit Sheard, who last month filed a challenge to Shell's exploration plan, "This cleanup plan, just like their previous cleanup plans, is woefully inadequate, based on technology that has never been proven."

The weirdest thing is that Shell is known for its ability to forecast correctly. It was the "only oil company to anticipate both 1973's oil-price boom and 1986's bust." Its scenario-planning group famously predicted the collapse of the Soviet Union and the opening of its oil fields. How can the company continue to be so myopic when it comes to assessing consumer power?

One guess is that its legal department doesn't talk to its brand reputation group. Too bad for Shell. Even the legal profession has its environmental activists and climate justice organizations are on the case. As Jennifer Marlow, co-founder of the Three Degrees Project says,

Shell insulated itself from the oil price shocks in the 70s by planning ahead and outsmarting its competitors. Now, it's applying the same anticipatory tactics to prevent public interest environmental groups from obstructing 'justice' at some point in the future. While future thinking helped Shell gain the market during the oil crisis, the same tactics won't work here.

And even if the Alaskan courts do rule in Shell's favor, it is the court of public opinion that wields the most power, as Shell will have to learn all over again.

This article originally appeared here.

Photo © Paul S. Hamilton