|
EPA fines Shell for air permit violations Agency settles with oil major over penalties for self-reported excess air emissions from the Noble Discoverer and the Kulluk Alan Bailey Petroleum News
The U.S. Environmental Protection Agency announced Sept. 5 that Shell had agreed to pay a total of $1.1 million in penalties for violations of air quality permit emissions limits by the company’s drilling vessels during the 2012 open water season in Alaska’s Chukchi and Beaufort seas. Shell will pay a $710,000 penalty for violations by the drillship Noble Discover and a $390,000 penalty for violations by the floating drilling platform the Kulluk, EPA said. The Noble Discoverer, owned and operated by Noble Corp., was drilling in the Chukchi Sea when the violations occurred, while Noble was operating the Shell-owned Kulluk in the Beaufort Sea. Noble Corp. was working under contract to Shell on Shell-operated oil and gas leases.
Shell had applied for and was issued air permits for the operation of the two vessels in its Alaska Arctic drilling program.
Self-reported According to notices of violation issued by EPA in January, Shell had self-reported excess emission of nitrogen oxides from the drilling vessels and EPA had determined that there had been multiple permit violations by each vessel.
“For its 2012 operations offshore Alaska, Shell accepted stringent emission limits that were based on assumptions and modeling. Following a season of operations, Shell better understands how emissions control equipment actually functions in Arctic conditions,” Shell spokeswoman Megan Baldino told Petroleum News by email in response to EPA’s announcement of the penalties. “Despite reported overages in 2012, 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 operating season.”
Multi-year saga The EPA penalties come as the latest event in a multi-year saga relating to the air permits that Shell needs for its Arctic offshore drilling operations. At an early stage in its exploration planning the company had recognized the obtaining of the permits as a major issue and the company upgraded the technology on both the Noble Discoverer and the Kulluk to reduce the emissions of pollutants, while also committing to using low sulfur diesel fuel for its drilling fleet.
EPA, responsible for air permitting on the Arctic outer continental shelf but with no previous experience of air permitting for offshore drilling operations, has struggled to resolve how to deal with several permit complications, including determining when a drilling vessel should be considered a stationary source requiring an air permit; determining which vessels within Shell’s drilling fleet should be included within the terms of the permit; and determining an appropriate boundary around a drilling operation, beyond which air quality standards should apply.
In 2010 a successful appeal by a group of environmental organizations against Shell’s permits resulted in a permit rework. And in September and October 2011 EPA issued revised permits which subsequently survived unsuccessful appeals.
Minor changes When Shell deployed its drilling fleet to the Beaufort and Chukchi seas in the 2012 Arctic open water season, the Noble Discoverer and the Kulluk were operating under the terms of those revised permits. But before the two drilling vessels left Dutch Harbor in the Aleutian Islands to transit to their drilling sites Shell applied to EPA for what the company characterized as some relatively minor changes to the permits. Apparently testing of the vessels’ engines immediately prior to the drilling season had shown that some emissions would not fully comply with the permit stipulations, although Shell also said that total emissions would remain below permitted limits.
EPA did allow drilling to proceed under the revised stipulations. However, it appears that during drilling operations both drilling vessels emitted more nitrogen oxides than were ultimately allowed. Shell self-reported these permit violations to EPA. The company commented that it had made every effort to meet the permit conditions for the drilling operations and that it was working with EPA to establish conditions that could realistically be achieved.
Alleged violations Earlier this year, separately from actions by EPA, the U.S. Coast Guard referred alleged environmental and safety violations involving both the Kulluk and the Noble Discoverer to the U.S. Department of Justice for investigation.
Meantime, following engine problems in the Noble Discoverer and the Dec. 31 grounding of the Kulluk in the Gulf of Alaska, both vessels are in Asian shipyards undergoing repair and upgrade. Shell did not drill in the Chukchi or Beaufort seas in 2013. The company has not said when it anticipates restarting its Arctic Alaska drilling program.
| 