Shell was slapped with more than $1 million in penalties for violation of Clean Air Act permits during the oil major's 2012 Arctic oil and gas exploratory drilling in the Chukchi and Beaufort Seas, offshore from Alaska's northern coast.
The U.S. Environmental Protection Agency announced the settlements with Shell Gulf of Mexico Inc. and Shell Offshore Inc. on Wednesday. Based on the agency's inspections and the oil company's own self-reporting of excess emissions, the EPA documented multiple air permit violations for Shell's Discoverer and Kulluk drillship fleets, during the two months the vessels operated last drilling season.
The EPA first announced that it was investigating the violations in January of 2013, and on Thursday the agency announced that Shell had agreed to pay a $710,000 penalty for the Discoverer's air permit violations and an additional $390,000 penalty for the Kulluk's.
For the 2012 offshore drilling season in Alaska, Shell accepted "stringent emissions limits that were based on assumptions and modeling," Shell spokeswoman Megan Baldino said in an email. "Following (the) season of operations, Shell better understands how emissions control equipment actually functions in Arctic conditions."
Despite the reported emissions overages during the drilling season, the EPA did not allege any negative impact from Shell's emissions to local populations, nor did Shell exceed its overall, allowable annual emissions for the season, Baldino said.
According to court documents, the Discoverer had a total of 23 violations, and the Kulluk had 11.
The EPA issued the Clean Air Act Outer Continental Shelf permits for Shell's operations in early 2012, which set emission limits, pollution control requirements, and monitoring, recordkeeping, and reporting requirements on the vessels and their support fleets of icebreakers, spill response vessels, and supply ships.
In 2012, Shell's multibillion-dollar hopes for a smooth Arctic offshore drilling season hit significant speedbumps.
The drillship Nobel Discoverer, a 571-foot vessel integral to the company's regional ambitions, was forced to stay in port in December of last year due to safety and pollution-control issues.
Petty Officer Kip Wadlow, a spokesman with the Coast Guard in Juneau, said in December that the Noble Discoverer was put under what is known as "port state control detention" on Nov. 29 when the drill ship was towed into Seward, thanks to a problem with its propulsion system.
Wadlow said that Coast Guard inspectors boarded the ship to determine what went wrong.
"While inspectors were on board the ship, they noticed several pretty serious crew safety and pollution-prevention system issues," he said.
By Dec. 19, the Discoverer was cleared to leave Seward. It was towed to Seattle, where further repairs took place. The Noble Discoverer and the Kulluk have spent much of 2013 overseas in Asian ports undergoing repairs and upgrades.
Problems only worsened when the round, 266-foot offshore drill unit Kulluk ran aground on New Year's Eve on the southeast shore of Sitkalidak Island, just south of the island of Kodiak.
The Kulluk left port in Dutch Harbor in late December, hauled by the vessel Aiviq and destined for port in Washington for wintertime repairs and maintenance. On Dec. 27, the towboat lost power to several of its engines in high seas in the Gulf of Alaska, and eventually lost its connection to the unpowered Kulluk, casting it adrift amid a subtropical cyclone that swept in. Despite repeated attempts by Shell and the Coast Guard to re-establish a tow, it hit ground in shallow waters.
Read more: The ongoing travails of Shell's Kulluk drill rig
On Jan. 6, the Kulluk was finally refloated and transported 30 miles north to the relative shelter of Kiliuda Bay on that latter island, and was awaiting inspection for any damage to its thick, steel, ice-capable hull.
Four days later, as Shell's recovery efforts of the once-stranded Kulluk proceeded quietly, the EPA delivered the two air permit violations.
Shell has spent more than $5 billion on its goal of drilling in the Arctic, but has yet to actually reach oil.
As for 2014, future plans for oil and gas exploration off Alaska's shores depend on a number of factors, Baldino said, including the readiness of Shell's rigs and its confidence that "lessons learned from our 2012 drilling program have been fully incorporated."
Contact Jerzy Shedlock at jerzy(at)alaskadispatch.com