EPA issues air-quality permit for Shell's Chukchi Sea operations

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Apr. 5 -- The US Environmental Protection Agency has issued an air-quality permit to Shell Gulf of Mexico Inc. on Apr. 1 that will permit Shell to explore for oil and gas this summer in the Chukchi Sea off Alaska.

It would be the first activity on the Alaskan portion of the US Outer Continental Shelf since the 1990s, according to Shell. It cited US Minerals Management Service estimates that the offshore region could hold more than 25 billion bbl of oil and nearly 120 tcf of gas.

Shell acquired 275 federal leases in the Chukchi Sea for $2.1 billion in OCS Lease Sale 193 in 2008, 3 years after it returned to Alaska with its acquisition of 137 offshore tracts in the Beaufort Sea. The company first explored the two seas along the state’s Arctic Ocean coast in the late 1980s and found oil and gas, but abandoned the discoveries because they could not be produced economically.

The US Minerals Management Service approved Shell’s exploration plan for its Chukchi Sea leases on Dec. 7. But the company still had to meet prevention of significant deterioration requirements under EPA’s air quality program because its drillship operations are considered a major emissions source. EPA proposed a permit for public comment on Aug. 20 and modified it on Jan. 8 in response.

The final permit which EPA issued on Apr. 1 will regulate air emissions from Shell’s Frontier Discoverer drillship and its support vessels and covers drilling-related air emissions from July to December. It is not only strict and enforceable but stronger than originally proposed, according to Rick Albright, director of the air, waste, and toxics division of EPA’s District 10 office in Seattle.

‘Tighter limits’
“Because North Slope Borough communities raised important social and public health concerns, this permit has undergone especially rigorous scrutiny,” Albright said. “As a result, we now have a permit with tighter emission limits and more stringent reporting requirements. For example, since the permit was proposed in August, we’ve reduced the allowable limits for sulfur dioxide by 98% and fine particulate matter by nearly 75%.”

Other changes include requiring Shell to replace hydraulic power engines on the drillship with newer, less polluting “Tier 3” units, and requiring all first-time testing of engines or other emitting units before the first drilling season begins instead of spreading it out over the first three drilling seasons, according to EPA.

The final permit also strengthened emission reporting to require better monitoring of deviations from normal permit conditions, and concluded that the Frontier Discoverer is an OCS emissions source when it attaches to the sea floor to begin drilling instead of when the first anchor is secured, the federal agency said.

It said that the permit will limit emissions from the drillship’s support fleet of two icebreakers and a supply vessel as well as emissions from the Frontier Discoverer’s oil spill response ship and three response workboats. All the drillship’s engines, generators and an incinerator are included.

US Sen. Lisa Murkowski (R-Alas.) welcomed EPA’s decision to issue the final permit. “This will allow Shell to move forward with exploration vital to our energy security,” she said on Apr. 1. “Given the president’s recent support for offshore drilling, this decision truly drives home the point that we can develop our resources responsibly.”

Contact Nick Snow at nicks@pennwell.com.