Shell gets air permit for Arctic offshore drilling

Shell Alaska received a much-awaited federal air quality permit that should enable the company to drill exploratory wells off the northern coast of Alaska this summer.

This is huge for the company, the last big hurdle Shell said it's facing after President Obama recently approved offshore oil exploration in the Beaufort and Chukchi seas (read more on that here).

Shell's work has been shovel-ready for a couple years, but has stalled as the company seeks key permits and federal approvals, and deals with protests (read Shell Alaska general manager Pete Slaiby's recent comments to the state Legislature here).

Here's the full EPA release:

EPA ISSUES AIR PERMIT TO SHELL OFFSHORE, INC., FOR DRILLING EXPLORATION IN ALASKA'S BEAUFORT SEA

(SEATTLE - April 9, 2010) Shell Offshore, Inc. (Shell) has received a "Prevention of Significant Deterioration" (PSD) air quality permit from the U.S. Environmental Protection Agency. This permit will regulate air emissions from Shell's Frontier Discoverer drillship and its support vessels during exploratory oil and gas drilling on the outer continental shelf (OCS) above the Arctic Circle in Alaska's Beaufort Sea. This permit, similar to one issued last week for the Chukchi, covers drilling-related air emissions from July to December each year.

Rick Albright, Director of EPA's Air, Waste & Toxics office in Seattle, said today's permit announcement reflects the Administration's goal to explore options for increasing domestic oil production in a way that protects the environment.

"This permit ensures that exploration and drilling will occur in a way that protects air quality," said Albright. "We've listened closely to the Arctic communities of Kaktovik, Nuiqsut and Barrow in our effort to craft a permit that is both effective and enforceable."

Air emissions from the Frontier Discoverer's support fleet of two icebreaker ships and a supply ship will be limited by the permit. Also covered are emissions from the Frontier Discoverer's oil spill response fleet. All the engines, generators and an incinerator on the Frontier Discoverer, are covered by the permit.

Because the drillship operations are considered a "major" source under EPA regulations, the permit must ensure that the operations meet the requirements of the Prevention of Significant Deterioration (PSD) program in addition to the requirements of the OCS regulations.

Approval of the PSD permit was based in part on installation of pollution reduction controls in order to implement Best Available Control Technology (BACT) and in order to demonstrate compliance with the National Ambient Air Quality Standards (NAAQS) and PSD increment. BACT applies only to emission sources on board the Discoverer.

In addition to BACT on the Discoverer, this permit requires Shell to reduce air emissions by utilizing Selective Catalytic Reduction on one of the icebreakers, Catalytic Diesel Particulate Filter on the Nanuq and Ultra Low Sulfur Diesel on all vessels that comprise the project.

EPA proposed the permit for public comment on February 17, 2010. EPA then conducted informational meetings and public hearings in Kaktovik, Nuiqsut and Barrow on March 16, 17, & 18, 2010.

Petitions for review must be received by the EAB no later than May 12, 2010.