EPA fines Shell more than $1 million for pollution violations in Alaska Arctic

ldemer@adn.comSeptember 5, 2013 

The U.S. Environmental Protection Agency has fined Royal Dutch Shell affiliates $1.1 million for emitting too many pollutants into the air during the 2012 drilling season offshore in the Alaska Arctic.

The agency announced late Thursday afternoon that it had settled two enforcement cases, once involving the Noble Discoverer drilling ship's work in the Chukchi Sea and the other involving the Shell-owned Kulluk drilling rig in the Beaufort Sea.

The EPA issued the Clean Air Act permits for Shell's Arctic operations in early 2012. The permits are complex documents drawn up by engineers that set emission limits and pollution control requirements on the drilling rigs and their support fleets of icebreakers, spill response vessels and supply ships, the EPA said. The permits also specify monitoring, record keeping and reporting requirements.

Shell didn't drill in 2013 because of a series of problems, including the grounding of the Kulluk as it was being towed across the Gulf of Alaska in December from Dutch Harbor to a Seattle area shipyard.

Shell says it learned from last year's drilling season.

"For its 2012 operations offshore Alaska, Shell accepted stringent emission limits that were based on assumptions and modeling," Shell said in a written statement emailed by spokeswoman Megan Baldino. "Following a season of operations, Shell better understands how emissions control equipment actually functions in Arctic conditions."

While the pollutants exceeded the permit limits in 2012, "the EPA did not allege any negative impact from Shell's emissions to local populations," the company said.

The overall emissions for 2012 were not exceeded, Shell said.

Meeting the air emission requirements has been difficult for Shell from the start. Environmental groups have said Shell's problems with air permits show it wasn't ready to drill in harsh Arctic conditions.

In 2011, Shell cancelled plans to drill in offshore in Alaska after a successful appeal of previous air permits. Environmental and Alaska Native groups have sued over the air permits.

Both of Shell's Alaska drilling rigs are old and needed extensive upgrading. Shell has spent tens of millions on retrofits to equipment such as catalytic exhaust systems to improve emissions. It installed multiple exhaust filters. It was using ultra-low sulfur diesel fuel.

Shell acknowledged before drilling started in 2012 that the Discover wouldn't meet some of the emission standards for the diesel-powered generators that run its drilling equipment.

"The consensus was that these particular standards for these particular generators were not achievable with the current technology available," Curtis Smith, a Shell spokesman, said last year. Shell obtained permission to drill while it worked toward a revised permit.

In January, the EPA issued Shell notices of air quality violations for both the Discoverer and the Kulluk.

The settlements filed Thursday show that the EPA confirmed 23 violations involving the Discoverer and support vessels and 11 violations involving the Kulluk.

Some violations concerned excessive emissions of nitrogen oxide, produced from the reaction of nitrogen and oxygen gases in the air during combustion. That can combine with other compounds and form particles that can damage lung tissue or worsen respiratory or heart disease.

Shell also failed to report some problems within the required two-day window, though it did submit a number of "excess emission/permit deviation reports." Some required tests weren't properly conducted. Sometimes, exhaust wasn't properly handled.

One violation came on Oct. 27, 2012, when Shell's contractors were unmooring the Discoverer from the drilling site in the Chukchi Sea. Crews turned on its propulsion engines for about four hours at a time that wasn't allowed. Shell said that was necessary to prevent the ship from drifting when high seas prevented a support vessel, the Tor Viking, from connecting to it, the consent agreement says.

Shell didn't admit any of the specific violations but agreed to pay $710,000 to settle the Discoverer case, and $390,000 for the Kulluk case.

Pete Slaiby, Shell's vice president for Alaska, signed the agreements, as did EPA's Edward Kowalski, director of compliance and enforcement for Seattle-based Region 10.

Shell's 2012 drilling season was shortened, in part because an oil spill containment system failed to pass tests.

Then-Interior Secretary Ken Salazar limited Shell to drilling partial wells that did not reach geological zones containing oil or other hydrocarbons.

Shell drilled two partial wells, one in the Chukchi and one in the Beaufort.

Shell has yet to announce plans for 2014.

Reach Lisa Demer at ldemer@adn.com or 257-4390.

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