The Minerals Management Service (MMS) last week reached a $49 million settlement agreement with Shell Oil Co. on unauthorized flaring or venting of large volumes of natural gas at its Auger platform and other facilities in the Gulf of Mexico.

The federal agency noted that the settlement agreement — the largest in MMS’s history — was forged in cooperation with the Department of Interior’s Office of the Inspector General, the U.S. Attorney’s Office for the Western District of Louisiana and the Department of Justice.

“A settlement of this size sends a clear message to industry that MMS is serious about compliance with its regulations,” said MMS Director Johnnie Burton. “MMS continues to ensure the American people receive the royalties that are due from production of their natural gas, and works to conserve our nation’s resources and to ensure safe and pollution-free offshore operations.”

The infractions were discovered in August 1998 when the MMS found that Shell had continuously flared or vented 1-6 MMcf/d of natural gas from the oil tanks at its Auger platform. The MMS noted that the flaring and venting had occurred since the start of production in April 1994, without permission as required by MMS regulations. In addition, Shell violated MMS regulations when it failed to maintain proper field records of the flaring or venting at the platform and did not report the continuously flared or vented volumes on Oil and Gas Operations Reports.

The MMS called Shell out in a letter dated Sept. 18, 1998, citing the violations and ordering the company to pay royalties on the flared or vented gas. On Sept. 28, 1998, MMS issued Shell a Notice of Non-Compliance and Civil Penalty for knowing or willful submission of false, inaccurate or misleading data for four years of reports related to Auger.

Following an administrative investigation, the agency said Shell agreed to correct its reports on other platforms in the Gulf and to install the necessary equipment on the Auger platform to recover the gas that would otherwise be flared or vented. Shell has corrected its reports on 19 leases or units, some dating back to 1975, and completed the equipment installation on Auger in July 1999, ending the continuous, high-volume flaring or venting from the oil tanks. The company has also developed a comprehensive reporting process to eliminate reporting problems throughout its Gulf operations.

©Copyright 2003 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.