Shell Fined $1.1 Million for Clean Air Act Violations

On Thursday, September 5, the U.S. Environmental Protection Agency, or EPA, announced that it had reached a settlement with Shell (NYSE: RDS-A  ) (NYSE: RDS-A  ) for violations of the company's Clean Air Act permits at two arctic oil and gas drilling sites. In its press release, the EPA points to "numerous" violations of Shell's air permits for its Discoverer drill ship fleet in the Chukchi Sea, and its Kulluk drill ship fleet in the Beaufort Sea, both off of the Alaskan coast. Today's settlements will cost Shell $710,000 for its Discoverer violation, and $390,000 for Kulluk, totaling $1.1 million for both penalties.

Under the Clean Air Act, the permits in question set strict limits on air pollutants based on the best available control technologies. EPA initially issued the permits in January 2012, but Shell requested, in June 2012, that the emissions threshold be raised for its Discoverer fleet. Despite EPA's temporary approval for higher limits than provided in the permits, Shell still exceeded its maximum allowable levels at both sites.

In February of this year, Shell announced a pause in its Alaska drilling program, "to ensure the readiness of all our equipment and people following the drilling season in 2012." The announcement followed an incident on December 31, 2012 in which its Kulluk rig ran aground and sustained damage. The grounding happened after the 2012 drilling season, which Shell described as having concluded "with no serious injuries or environmental impact."

At the time of writing, Shell's announcement of a drilling pause was the company's last public statement on its Alaska drilling activities.


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