Shell contractor Noble Drilling to be sentenced for felony violations

The contractor that operated drill ships for Shell in remote Arctic Alaska waters is scheduled to appear in federal court in Anchorage on Friday to be sentenced for eight environmental and maritime safety violations committed during the oil company's mishap-laden 2012 drilling season.

Noble Corp.'s U.S. unit, Noble Drilling (U.S.) LLC, agreed last week to plead guilty to eight felony criminal counts and to pay $12.2 million -- $8.2 million in penalties and $4 million for a community service payment. The company also agreed to serve four years' probation and to subject its entire corporate fleet to an environmental compliance plan.

Noble operated the Kulluk, a Shell-owned conical drilling unit that grounded and was badly damaged in a Gulf of Alaska storm on Dec. 31, 2012, and is the owner and operator of the Noble Discoverer. Shell used the Kulluk to drill the top portion of an exploration well in the Beaufort Sea and it used the Discoverer to drill in the Chukchi Sea.

Although the dramatic grounding of the now-ruined Kulluk drew the most worldwide attention, seven of the eight criminal counts concerned actions aboard the Discoverer. In its plea agreement, Noble admitted that the Discoverer crew dumped oily waste overboard, illegally used ballast tanks to hold oil-laced water, mismanaged the engine and ship safety systems and concealed problems form the U.S. Coast Guard and other authorities.

Many of the misdeeds concerned Noble's failure to use a required oil-water separator. Instead, the crew rigged a makeshift hose-and-barrel system that discharged waste directly into the ocean, according to the plea agreement. Engine problems resulted in numerous issues, including engine shutdowns, excessive engine-room smoke that was hazardous for workers and flame-sparking backfires, one of which drew a response from the Unalaska fire department, according to the plea agreement.

In their sentencing memorandum, federal prosecutors said Noble -- a 93-year-old international drilling company with a fleet of 35 mobile drilling units and a reported 2013 net income of $783 million on $4.2 billion in total revenues -- was well aware of the environmental and safety requirements and the laws it broke.

"Even the least sophisticated vessel operators understand the long-established requirements of preventing pollution from ships through the use of oil water separators, oil content meters, and through accurately tracking and recording the transfers of oil and oily wastes throughout their vessels. They also understand, and should prioritize, the need to prevent and when necessary report hazardous conditions involving their ships," said the government's sentencing memorandum, filed Monday in U.S. District Court.


"Noble is one of the largest and most sophisticated drilling operators in the world, and yet it failed to abide by these well-understood and basic legal requirements," the memorandum said.

Noble, in its sentencing memorandum, described the agreed-to punishment as "an appropriate sentence in this case." The company's sentencing memorandum, filed Tuesday, said Noble cooperated with the investigation and has made "numerous repairs and upgrades" to the Discoverer, including replacement of the entire engine.

The maximum possible penalty for each count to which Noble has agreed to plead guilty is $500,000 or twice the gross gain reaped from the violation, whichever is greatest, according the government's sentencing memorandum. The maximum possible probation for each count is five years, according to the sentencing memorandum.

Shell, which could return to the Chukchi in 2015 to drill several wells, still plans to use the Noble Discover as one of its drill ships, according to the company's revised exploration plan, filed in August with federal regulators. Another contracted drill ship, Transocean's Polar Pioneer, would replace the Kulluk, according to Shell's revised exploration plan, filed in August. Shell intends to complete several wells in multiple seasons, according to the exploration plan.

Yereth Rosen

Yereth Rosen was a reporter for Alaska Dispatch News.