Proposed Air Permit: Shell Offshore Inc. - Beaufort Sea, Alaska
Public Comment Open: February 17 - March 22, 2010

The U.S. Environmental Protection Agency (EPA) is proposing a Clean Air Act permit to Shell Offshore
Inc. (Shell) at 3601C St., Ste. 1000, Anchorage, Alaska 99503. The permit will allow Shell to operate
the Frontier Discoverer drillship and its associated fleet for multi-year exploration drilling within Shell's
current lease blocks in lease sales 195 (March 2005) and 202 (April 2007) on the Beaufort Sea outer
continental shelf (OCS), within and beyond 25 miles from Alaska's seaward boundary. Because the
drillship operations are a "major" source, the permit requires the drillship operations to comply with the
Prevention of Significant Deterioration (PSD) regulations.

You are invited to comment on the proposed permit until March 22. If you believe any condition of
this permit is inappropriate, you must comment on the permit and raise all reasonably ascertainable
issues and submit all reasonably available arguments supporting your position by the end of the
comment period. EPA is also asking for comments on the non-guideline ISC3-PRIME modeling system
used to predict air pollutant concentrations and determine ambient air quality impacts in this permit.

SEND COMMENTS TO:

PUBLIC HEARINGS

Email: R10ocsairDermits@eDa.aov
Mail: EPA Region 10

Shell Beaufort Air Permit
1200 6th Ave, Ste. 900, AWT-107

Seattle, Washington 98101
Fax: 206-553-0110

March 16, 2010

Information Meeting: 6:00 pm
Public Hearing: 7:00 pm
City Hall
Kaktovik, Alaska

March 17, 2010

Information Meeting: 6:00 pm
Public Hearing: 7:00 pm
Kisik Community Center
Nuiqsut, Alaska

March 18, 2010

Information Meeting: 6:00 pm
Public Hearing: 7:00 pm
Inupiat Heritage Center
Barrow, Alaska

EPA will receive public comments on the proposed air permit at public hearings in Kaktovik, Nuiqsut
and Barrow. You do not need to attend the public hearings to give your comments. You can send
written comments by mail or e-mail. You can also record and submit your comments on cassette tape
or CD. Send your comments to the addresses above.

Comments must be postmarked by March 22, 2010.

For More Information

Questions about the air permit:	Questions about the public hearings:

Natasha Greaves, Air Permit Writer	Suzanne Skadowski, Public Affairs

(206) 553-7079 ireaves.natasha@epa.gov	(206) 553-6689 skadowski.suzanne@epa.gov

Beaufort air permit Web Site: vosemite.epa.gov/R10/airpaqe.nsf/Permits/beaufortap

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PERMIT DOCUMENTS AVAILABLE

EPA has prepared a detailed document called a statement of basis that explains the derivation of the
permit conditions and the reasons for them. The record for this permit includes Shell's application and
supplemental information, the statement of basis, the proposed permit and all other materials relied on
by EPA. The permit record is available at EPA Region 10, 1200 6th Ave, Seattle, Washington, from 9
am-12 pm and 1 pm-4 pm, Monday-Friday, (206) 553-1200.

The permit application, the statement of basis, and the proposed permit will also be available at the
locations listed below. Please call in advance for available viewing times.

Barrow City Office, 2022 Ahkovak Street, Barrow, Alaska, 99723, (907) 852-4050

Kaktovik City Office, 2051 Barter Avenue, Kaktovik, Alaska, 99747, (907) 640-6313

Nuiqsut City Office, 2230 2nd Street, Nuiqsut, Alaska, 99789, (907) 480-6727

EPA Alaska Office, Federal Building, 222 West 7th Ave, Anchorage, Alaska, 99513, (907) 271-5083

EPA Region 10 web site: vosemite.epa.gov/R10/airpaqe.nsf/Permits/beaufortap

To request a copy of the permit application, statement of basis and/or the proposed permit, or to be
added to our Beaufort or Chukchi permits mailing lists, contact Suzanne Skadowski, EPA Public Affairs,
(206) 553-6689 skadowski.suzanne@epa.gov.

HOW TO COMMENT

Any person may submit comments on the proposed air permit during the public comment period. If you
believe any condition of this permit is inappropriate, you must raise all reasonably ascertainable issues
and submit all reasonably available arguments supporting your position. Any documents supporting
your comments must be included in full and may not be incorporated by reference unless they are
already part of the record for this permit, consist of state or federal statutes or regulations, EPA
documents of general applicability, or other generally available referenced materials.

We recommend that comments submitted by mail, e-mail, cassette tape or CD include your contact
information so that we can provide you with notice of the final permit decision. If EPA cannot read or
hear your comment and cannot contact you for clarification, we may not be able to fully consider your
comment. Any personal information, including addresses or phone numbers that are included with a
public comment will be included in the public record for the permit.

All comments must be postmarked by March 22, 2010.

This permit is subject to the decision-making procedures of 40 C.F.R. Part 124. All timely comments
will be considered in making the final decision, included in the record, and responded to by EPA. When
EPA issues a final permit decision, we will prepare a response to comments received, an explanation of
any changes made in the final permit, and we will notify all commenters of our permit decision.

INFORMATION ABOUT THE PROPOSED PERMIT
Sources of Air Emissions

Under OCS regulations, emissions from a support vessel are counted as emissions from the OCS
source when the Discoverer is an OCS source and the support vessel is within 25 miles of the
Discoverer. This permit proposes two alternatives for when the Discoverer is considered an "OCS
source" under the permit and when the emission limitations and other operating restrictions apply. In
this proposal, EPA seeks comment on considering the Discoverer to be an OCS source when it is
attached by a single anchor to the seabed. EPA is also soliciting comment on an alternative proposal

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to consider the Discoverer to be an OCS source when it is sufficiently secure and stable to commence
exploratory activity at a drill site.

The Discoverer is a turret-moored drillship with air emission sources that include generators for the
drilling systems and associated self-powered equipment (such as air compressors and hydraulic
pumps), boilers for heating and an incinerator. The Discoverer's exploratory drilling will be supported by
two icebreakers, a supply ship (or barge and tugboat), a drill cuttings/mud barge and tugboat, and an oil
spill response fleet (a ship, two work boats, a skimmer, a tugboat, and a barge).

The main pollutants that will be emitted from the Discoverer and its support vessels are nitrogen oxides
(NOx), sulfur dioxide (S02), particulate matter (PM, PMio, and PM2.5), carbon monoxide (CO), and
volatile organic compounds (VOC).

Air Pollution Controls

To limit air pollution emissions, the permit requires Best Available Control Technology (BACT) on the
Discoverer and controls on some other emission sources in the fleet, including:

¦	Use of ultra-low sulfur diesel fuel in the Discoverer and all fleet vessels when a vessel is within 25
miles of the Discoverer and the Discoverer is operating as an OCS source, to limit emissions of S02
and sulfuric acid mist (H2S04).

¦	Selective catalytic reduction controls on the six largest engines on the Discoverer and the
icebreaker/anchor handler's main diesel engines, to reduce emissions of NOx.

¦	Oxidation catalysts or catalytic diesel particulate filters on the six largest engines and all other
engines on the Discoverer, to limit emissions of CO, PM, PM10, PM2.5, and VOCs.

¦	Good operation and maintenance procedures and good combustion practices on the Discoverer and
the associated fleet, to limit air pollution emissions overall.

¦	Record-keeping and reporting necessary to monitor compliance with permit terms and conditions.
National Ambient Air Quality Standards and PSD Increments

As part of the permit application process, Shell is required to use air quality monitoring information and
modeling to demonstrate that air quality in the vicinity of their drilling operations in the Beaufort Sea will
continue to meet the National Ambient Air Quality Standards and PSD increments. PSD increments are
limits on the amount that air quality can be degraded by actual emissions.

In addition to emission limitations and permit requirements that impose BACT, the permit also includes
annual emission limits for NOx, daily emission limits for PM10 and PM2.5, and other operational
restrictions to ensure that emissions from the Discoverer and its support vessels do not exceed the
National Ambient Air Quality Standards or PSD increments while the Discoverer is anchored at a drill
site. Operational restriction include: ultra-low sulfur diesel fuel use in all support vessels, drilling limited
to a total of 168 days between July 1 and December 31 of each year, and limits in the amount of fuel
that can be combusted.

The permit is based on the non-guideline ISC3-PRIME modeling system used to predict air pollutant
concentrations. This modeling system has not been approved by the EPA for general use, but has
been tested for use in arctic conditions. EPA specifically requests public comment on the suitability of
this model in this permitting action.

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PSD increments are limits on the amount that air quality can be degraded by actual emissions. EPA
predicts that Shell's operations will consume the percentage of PSD increments as shown in Table 1.
The permit will allow the Discoverer and its support vessels to emit air pollutants as shown in Table 2.

Table 1 - PSD Increment Predicted to be Consumed by Shell's Operations

Air Pollutant

PSD Increments

3-hour

24-hour

Annual

Nitrogen Dioxide (N02)

-

-

78.8%

Particulate Matter Less than 10 (PM10)

-

69.0%

6.5%

Sulfur Dioxide (S02)

4.9%

3.5%

0.5%

Table 2 - Permitted Air Pollutant Emissions from Discoverer and Fleet as OCS Source at all Locations

Air Pollutant

Emissions

(tons per year)

Carbon Monoxide (CO)

464

Nitrogen Oxides (NOx)

1371

Particulate Matter Less than 2.5 (PM25)

57

Particulate Matter Less than 10 (PM10)

65

Sulfur Dioxide (S02)

2

Volatile Organic Compounds (VOC)

96

ADDITIONAL PROJECT INFORMATION
Arctic General Permit

Shell's proposed drilling activities also include wastewater discharges to the Beaufort Sea, which are regulated
under the National Pollutant Discharge Elimination System (NPDES). In 2006, EPA issued the Arctic NPDES
General Permit (AKG-28-0000) to authorize discharges from oil and gas exploration activities in state and federal
waters on the outer continental shelf in the Beaufort Sea, Chukchi Sea, Hope Basin, and northern Norton Basin, if
the facilities meet the permit terms and conditions. This permit expires in 2011.

Shell submitted two notices of intent (NOIs) requesting coverage under the Arctic General Permit for wastewater
discharges related to its proposed exploration activities in Camden Bay within the Beaufort Sea. EPA will decide
whether to grant coverage for Shell under the Arctic NPDES General Permit following the end of the public and
tribal review period. EPA is accepting public and tribal input on Shell's Beaufort NOIs until March 22, 2010.

To learn more about the Arctic General Permit or to comment on Shell's Beaufort NOIs, contact:

Hanh Shaw, EPA NPDES Permit Writer, (206) 553-0171 shaw.hanh@epa.gov.

To sign up for the Arctic General Permit mailing list, contact:

Suzanne Skadowski, EPA Public Affairs, (206) 553-6689 skadowski.suzanne@epa.gov.

Find more information on the Arctic NPDES General Permit and Shell's Beaufort NOIs on the Web:
vosemite.epa.gov/R10/WATER.NSF/NPDES+Permits/General+NPDES+Permits.

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