Alaska Environmental Permit Compliance Awareness Training

1. Alaska Environmental & Permit Compliance Awareness Training Summer 2010 You can find all the Templates for Presentations on the Graphics Web side. Visit our web page : sww.siep.shell.com/graphics (under “Templates”) You can find all the Templates for Presentations on the Graphics Web side. Visit our web page : sww.siep.shell.com/graphics (under “Templates”)

2. Environmental & Permit Compliance Awareness Training - 2010 Objectives of today’s training: Awareness of environmental principles/concerns, regulatory agencies and permits for 2010 Knowledge of the Alaska Compliance Manual (ACM) How it can help you How to use it What to do What not to do Contacts

3. Operating in Alaska We Go Beyond…

4. Compliance Do you know which permits or stipulations apply to your operation? Can you influence the operations to exceed a limit? Do you have any sound-generating equipment on board? Are you on the drill rig? Is your vessel associated with the drill rig? What are your effluent systems and where do they go? Does your operation involve handling or generating waste? Ask yourself if any of these question apply to your vessel or your role in Shell’s operations. If yes, then you have permit conditions to comply with. Ask yourself if any of these question apply to your vessel or your role in Shell’s operations. If yes, then you have permit conditions to comply with.

5. Overview of Permits for Non-Drilling Operations Examples of some of the permits Shell must obtain for 2010 operations Incidental Harassment Authorization – National Marine Fisheries Service Letter of Authorization – US Fish & Wildlife Service Ancillary Activity Authorization – Minerals Management Service

6. Overview of Permits for Drilling Operations Examples of some of the permits Shell must obtain for 2010 operations Incidental Harassment Authorization – National Marine Fisheries Service Letter of Authorization – US Fish & Wildlife Service Exploration Plan – Minerals Management Service Application for Permit to Drill – Minerals Management Service National Pollution Discharge Elimination System Water Permit – Environmental Protection Agency Prevention of Significant Deterioration Air Permit – Environmental Protection Agency

7. Duty to Comply Complying with permits is VERY important, is not optional, and is fundamental to Shell’s license to operate here. Possible results of non-compliance: Damage to reputation Fines Imprisonment Permit revocation or termination Mandatory shut down of operations

8. Mammal Permits US Fish & Wildlife Service issues Letters of Authorization (LOA) Coverage for the incidental taking by Level B harassment of polar bears & pacific walrus National Marine Fisheries Service issues Incidental Harassment Authorizations (IHA) Coverage for the incidental taking by Level B harassment of whales & seals Take - to harass, hunt, capture, collect, or kill, or attempt to harass, hunt, capture, collect, or kill any marine mammal. Level B Harassment - any act of pursuit, torment, or annoyance which has the potential to disturb a marine mammal in the wild by causing disruption of behavioral patterns including, migration, breathing, nursing, breeding, feeding, or sheltering, but does not have the potential to injure a marine mammal in the wild. Take and Level B Harassment – definitions directly from Federal Regulations 50 CFR 216.3Take and Level B Harassment – definitions directly from Federal Regulations 50 CFR 216.3

10. Minerals Management Service (MMS) MMS issues Ancillary Activity (AA) Notices Obtaining permission from MMS to conduct work on our leases A check for MMS to ensure the operator has obtained all necessary permits Examples of AA conditions Document and report all bird strikes to MMS Properly label drums & equipment Equipment lost overboard must be reported to MMS and (situation depending) the U.S. Coast Guard within 24 hours Drums, Cables, Wire, Trash, Chains, Hard Hats, Radios, etc. Note: Shell Alaska Venture Operations Waste Management Program includes policy letter from Asset Manager explicitly prohibiting overboard trash of any sort--it’s everyone’s responsibility. The AA from the MMS is like getting permission from your landlord to paint your apartment. Allowing you to do work on land that your are “renting” EXAMPLE: Shallow Hazards Project must obtain an AA.The AA from the MMS is like getting permission from your landlord to paint your apartment. Allowing you to do work on land that your are “renting” EXAMPLE: Shallow Hazards Project must obtain an AA.

11. Permits Specific to Drilling

12. Environmental Protection Agency Clean Water Act – National Pollution Discharge Elimination System (NPDES) Permit Only the Discoverer Drill Ship is permitted under the NPDES Water Quality Permit – Arctic General Permit AKG-28-0000 Owners of other vessels (not Shell) must obtain a Vessel General Permit (VGP), which covers discharge from normal vessel operations within 3 miles of shore. Key Points Regarding NPDES Permits: Effective once the drill rig is attached to the seafloor Covers Beaufort Sea, Chukchi Sea, Hope Basin & Norton Basin Must obtain a Notice of Intent (NOI) for operation under the General Permit before discharging No discharge of free oil, foams, floating solids or anything that may create an oily sheen Once aware of a permit exceedance, Shell must report to EPA First – Within 24 hours by phone Second – Follow up within 5 days in written format It is not necessary for the support vessels to have coverage under the Arctic General Permit. This permit only applies to the vessel that is stationary to the seafloor. Support vessels operate their discharges in compliance with MARPOL and Shell standards. It is not necessary for the support vessels to have coverage under the Arctic General Permit. This permit only applies to the vessel that is stationary to the seafloor. Support vessels operate their discharges in compliance with MARPOL and Shell standards.

13. EPA - NPDES Permit, Continued Permitted Discharges for the Discoverer 001 Drilling Fluids and Drilling Cuttings 002 Deck Drainage 003 Sanitary Wastes 004 Domestic Wastes 005 Desalination Unite Wastes 006 Blowout Preventer Fluid 009 Non-contact Cooling Water 010 Uncontaminated Ballast Water 011 Bilge Water 012 Excess Cement Slurry 013 Mud, Cuttings and Cement at the Seafloor Shell opted to not discharge number 007 & 008Shell opted to not discharge number 007 & 008

14. EPA - NPDES Permit, Continued To ensure compliance with the discharges Shell must complete, document and submit: Toxicity tests Volume estimates Discharge rates

15. EPA – Air Permits Clean Air Act – Prevention of Significant Deterioration Air Permit. This is EPA’s first OCS PSD permit. The Discoverer is the “OCS Source.” The designation is activated when the on-site Shell rep. declares the drill ship secure and stable for exploration activities. Only the vessels modeled in the permit are allowed to support the OCS Source and drilling operations. Science, shallow hazards and other industry vessels not applicable to permit and their vessel emissions are not counted toward the air permit limits Required to reduce emissions to minimize onshore impacts. AK Venture commitment requires all project vessels to use ultra low sulfur diesel fuel. A PSD permit is structured to limit any deterioration of an air shed. A permittee is only allowed to pollute in increments and if those increments are exceeded then they are in non-compliance with the Clean Air Act and are subject to fines, penalties, and/or corrective actions. Examples of emission controls include: All project vessels will use Ultra Low Sulfur Diesel fuel Rolling 12-month fuel usage limits Selective Catalytic Reduction (SRC) installed on the Disco’s main generator engines Filters installed on many of the other engines Limits on how many pounds of waste may be incinerated each day A PSD permit is structured to limit any deterioration of an air shed. A permittee is only allowed to pollute in increments and if those increments are exceeded then they are in non-compliance with the Clean Air Act and are subject to fines, penalties, and/or corrective actions. Examples of emission controls include: All project vessels will use Ultra Low Sulfur Diesel fuel Rolling 12-month fuel usage limits Selective Catalytic Reduction (SRC) installed on the Disco’s main generator engines Filters installed on many of the other engines Limits on how many pounds of waste may be incinerated each day

16. Environmental Protection Agency, Cont. What to do when an EPA permit deviation occurs? Deviation Reporting Immediately contact your supervisor aboard the vessel Support Vessels: onboard Shell Representative will contact AK RA Drill Rig: Permit Compliance Coordinator will contact AK RA Responsible person will contact Regulatory Affairs via the Duty Phone (907-830-7435) as soon as practically possible after deviation becomes known Shell Representative or Permit Compliance Coordinator will provide information for Regulatory Affairs to properly complete a deviation form All contacts to US EPA are made though Regulatory Affairs

17. Alaska Compliance Manual Who uses the ACM? Field Personnel Office Personnel What is the purpose? Plain English guide of permits & authorizations associated with specific operations “How To” for environmental & regulatory compliance activities PSD Air Permit NPDES Discharge Permit Marine Mammal Sightings Compliance Checklists Equipment Overboard

18. Env. Permit Compliance Checklists Checklists help communicate and document daily compliance from field operations to Alaska Regulatory Affairs. Most vessels will have a Shell Representative on board who will complete and submit the daily checklists to Alaska Regulatory Affairs. The drill rig will have an onboard permit compliance coordinator. This individual will be responsible for completing the marine mammal checklists, and NPDES permit checklists. There will also be an air permit compliance coordinator who will complete the air permit checklist.

19. Waste Management Program Alaska Venture Waste Management Plan includes: Waste descriptions: Absorbent pads to wood, and everything in between! Instructions for completing: Necessary stickers, manifests, etc. Operations Waste Management Plan Template Waste Management & Waste Awareness Training –complement to your (required) vessel WMP Shell Alaska Venture Operations Waste Management Program and policy letter prohibit overboard trash of any sort. Contact Waste Coordinator or Environmental group with questions.

20. Know to contact your Shell Representative if a spill occurs. Your Shell Rep should then follow the Incident Reporting guidelines and call the RA Duty Phone so agency contacts can be made.Know to contact your Shell Representative if a spill occurs. Your Shell Rep should then follow the Incident Reporting guidelines and call the RA Duty Phone so agency contacts can be made.

21. Review

22. Regulatory Compliance - What to do Copy of the permits (IHA & LOA) and Mammal plans (Bear Plan and 4MP) must be on site at all times (vessel or aircraft) All crew members of the vessel must watch for marine mammals If a mammal is observed: Notify your MMO of the observation, apply necessary mitigation measures: Reduce speed if the vessel is within 900 ft of a marine mammal in water Steer the vessel away to avoid collision with marine mammal Power down or shut down sound source if marine mammal is within the safety zone Power downs or shut downs (of the sound source, e.g. air guns) must be reported within 24 hours to Regulatory Affairs Polar Bear & Walrus sightings must be reported to Regulatory Affairs within 24 hours All equipment should be clearly marked, labeled, and secured properly on the vessel. Report equipment overboard to Shell Representative Report must be made within 24 hours to Alaska Regulatory Affairs Follow mitigation measures: Such as reduce speed if within 900 feet of MM in water Steer vessel to avoid collision with MM Power down or shut down if necessary Report PD and SD Report observations of PB and walrusFollow mitigation measures: Such as reduce speed if within 900 feet of MM in water Steer vessel to avoid collision with MM Power down or shut down if necessary Report PD and SD Report observations of PB and walrus

23. Regulatory Compliance – What NOT to do May not cause injury, harm, or death of a marine mammal, Level A Take Do not operate a vessel in a manner that it would Come within 1/2 mile of Polar Bears or Walrus observed on land or ice Separate groups of mammals Make multiple changes in direction Continue on a path of travel toward an observed group of marine mammals No trash & debris overboard No discharging un-permitted waste streams from the drill ship No swapping vessels to support drilling before notifying EPA (through Regulatory Affairs)

24. Take Away Points All crew members to watch for marine mammals Environmental matters MATTER! Nothing overboard – marine debris Report all possible non-compliances to your Shell Representative If ever in doubt, contact your Shell Representative and/or the Alaska Duty Phone 907-830-7435

25. Contacts

26. QUESTIONS/COMMENTS?