EPA cites Shell Arctic rig for permit violations


EPA cites Shell Arctic rig for permit violations

Royal Dutch Shell PLC's Kulluk oil rig violated nine conditions of its air-quality permit while drilling in the waters off Alaska, the U.S. Environmental Protection Agency said in a letter issued late Thursday.

The EPA's findings mark the latest setback for Shell's $5 billion Arctic drilling plans. The $292 million rig was damaged after running aground on the uninhabited Sitkalidak Island south of Alaska on Dec. 31 during its trip to Seattle for maintenance. On Monday, Shell towed the Kulluk to Kodiak Island's Kiliuda Bay and now is assessing the damage.

The EPA's complaint stated that Shell didn't properly monitor the air emissions coming out of the Kulluk as required by the rig's permit under the Clean Air Act. The complaint also said the Kulluk exceeded nitrogen-oxide emission limits, ran its incinerator longer than the permit allowed and failed to report excess air emissions in a timely manner.

The EPA can levy fines of up to $37,500 a day for each violation.

The latest wrangling over permits shouldn't prove too high a hurdle for the company, said Ian MacPherson, energy analyst with Simmons & Co. International.

"Shell has navigated the regulatory process in the U.S. pretty well over the past few years," Mr. MacPherson said. "I tend to think that they can work through this."

Shell said it would work with the EPA to change the conditions of the Kulluk's air permit.

"We have already proposed necessary permit revisions as a result of ongoing conversations with the agency," said Shell spokeswoman Kelly op de Weegh. "We remain committed to minimizing the environmental footprint of our Arctic offshore operations."

On Tuesday, the U.S. Interior Department launched a high-level review of Shell's accidents and mishaps in its Arctic Ocean drilling activities. Environmentalists have called on the White House to suspend Arctic drilling permits, saying the Arctic region's extreme weather makes drilling activities too likely to lead to oil or fuel spills.


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