Here’s Why Shell and BP Have Asked for Leniency

While shares of Royal Dutch Shell (NYSE:RDSA)(NYSE:RDSB) have remained relatively flat despite the ongoing problems with its Arctic operations, BP’s (NYSE:BP) shares were down slightly Friday on the news that the company has asked for some leniency on its oil spill-related fines.

Since Shell’s Kulluk drilling rig ran aground 300 miles southwest of Anchorage on the night of December 31, environmentalists, lawmakers, and shareholders alike have questioned the wisdom of Arctic energy programs. These escalating concerns prompted the U.S Interior Department to launch a 60-day review the oil and gas company’s operations on Tuesday.

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But the Kulluk has caused other problems as well. The Environmental Protection Agency, announced on Thursday that it had issued multiple air quality violations for Shell’s drilling rig Kulluk and its drill ship Noble Discoverer for emitting excessive amounts of nitrogen oxide. Shell responded to the allegations with a statement saying that the real “problem is the allowable amounts of nitrogen oxide set by the federal Clean Air Act.”

“We have made every effort to meet the permit conditions established by the EPA for offshore Alaska, and we continue to work with the agency to establish conditions that can be realistically achieved,” Shell said in the statement.

The EPA is reviewing the company’s application to amend the Discoverer’s air permit that allows it to operate in Arctic’s Chukchi Sea.

BP is also asking the federal government for an amendment. The oil and gas producer has argued that it cannot be penalized for the millions of gallons of oil that escaped after the explosion of the Deepwater Horizon drilling rig in 2010, but were captured before spilling into the ocean. In a court filing seen by the Associated Press, BP said that workers captured 34 million gallons of crude, and asked U.S. District Judge Carl Barbier to not include the collected oil when calculating the company’s Clean Water Act penalties. A team of scientists working for the government has estimated that 200 million gallons oil, including the oil that was collected, flowed out of the blown-out well.

The first phase of the government’s civil trial is scheduled to begin on February 25.

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