The Environmental Protection Agency (EPA) has issued the final air quality permits necessary for Shell Oil Co. to conduct oil and gas exploration drilling in Alaska’s Arctic region.

Last month the U.S. unit of Royal Dutch Shell plc was awarded conditional approval by the Department of Interior to drill up to four exploratory wells over two years in the Beaufort Sea, where it has invested more than $3.5 billion in leases and predevelopment. Bureau of Ocean Energy Management, Regulation and Enforcement Director Michael Bromwich said Shell, which is the biggest leaseholder in Alaska’s offshore, may begin exploring the area in July 2012 once it obtains required permits (see Daily GPI, Aug. 5).

“The issuance of a final air permit and the recent conditional approval of our Revised Beaufort Sea Plan of Exploration are two more steps in a series of recent positive developments and adds to our confidence that we will be drilling our offshore Alaska leases by July of next year,” Shell said in an email to NGI.

“Shell has already submitted other necessary permits to various agencies in preparation for next year’s drilling season, and we await those responses…[W]e are still pursuing permits and authorizations from the U.S. Fish and Wildlife Service and the National Marine Fisheries Service. Later in the process, we will file our Applications for Permits to Drill, largely considered the final permitting steps before drilling commences.”

The newly granted air permits allow Shell to operate a drillship and a support fleet of icebreakers, oil spill response vessels and supply ships for up to 120 days each year in the Chukchi Sea and Beaufort Sea Outer Continental Shelf starting in 2012, EPA said Monday. “Shell’s exploration drilling fleet will emit more than 250 tons of air pollutants a year and therefore, under existing law, must have federal Clean Air Act Outer Continental Shelf [OCS]/Prevention of Significant Deterioration permits,” EPA said.

Shell last year had come close to completing the required permit applications but fallout from the Macondo well blowout in the Gulf of Mexico scuttled those plans. Shell originally planned to drill its first Beaufort well this summer but it again dropped the proposal after two required air quality permits were revoked by the Environmental Appeals Board (see Daily GPI, Feb. 4; Jan. 5). The board faulted the EPA for not reviewing fully the potential emissions from a drillship and support vessels. Shell then resubmitted its exploration plan in May to specifically target shallow waters of the Beaufort Sea’s Camden Bay, which is about 150 feet deep (see Daily GPI, May 6).

Under the new permits, Shell is required to reduce its fleet emissions of most key air pollutants, including fine particulates and nitrogen dioxide, by more than 50% from the levels allowed in the 2010 permits. These reductions are largely due to new emissions controls Shell added to meet the new nitrogen dioxide standard that went into effect in 2011, EPA said.

EPA Region 10 has proposed two other draft air permits for oil and gas exploration in the Alaska Arctic. Shell applied for an OCS/Title V air permit to operate its drilling rig in the Beaufort Sea starting in 2012. Public comment closed Sept. 6. ConocoPhillips applied for an OCS/Title V permit to operate a jackup drill rig in the Chukchi Sea starting in 2013. Public comment ends Wednesday.

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