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U.S. EPA Cites Shell Arctic Drilling Rig for Air Permit Violations

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Royal Dutch Shell PLC's Kulluk oil rig violated nine conditions of its air-quality permit while drilling in the waters off Alaska, the U.S. Environmental Protection Agency said in a letter issued late Thursday.

The EPA's findings mark the latest setback for Shell's $5 billion Arctic drilling plans. The $292 million rig was damaged after running aground the uninhabited Sitkalidak Island south of Alaska on Dec. 31 during its trip to Seattle for maintenance. Shell on Monday towed the Kulluk to Kodiak Island's Kiliuda Bay and now is assessing the damage.

The EPA's complaint states that Shell didn't properly monitor the air emissions coming out of the Kulluk as required by the rig's permit under the Clean Air Act. The complaint also said the Kulluk exceeded nitrogen-oxide emission limits, ran its incinerator longer than the permit allowed and failed to report excess air emissions in a timely manner.

The EPA can levy fines of up to $37,500 a day for each violation.

A Shell spokeswoman didn't immediately respond to questions.

The U.S. Interior Department on Tuesday launched a high-level review of Shell's accidents and mishaps in its Arctic Ocean drilling activities. Environmentalists have called on the White House to suspend Arctic drilling permits, saying that the Arctic region's extreme weather makes drilling activities too likely to lead to oil or fuel spills.

Copyright (c) 2012 Dow Jones & Company, Inc.

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