Attorney General files criminal charges against Shell on whistleblower reports over pipeline spills

• Reid Frazier
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  Reid R. Frazier is an energy reporter for The Allegheny Front, a Pittsburgh-based public media outlet covering the environment in Pennsylvania. His work has aired on NPR and Marketplace.

Pennsylvania Attorney General Michelle Henry charged Shell Pipeline Friday with chronically underreporting spills of industrial waste during construction of a pipeline feeding the company’s Beaver County ethane cracker.

The charges were made based on testimony from whistleblowers who worked on the Falcon Pipeline during its construction from 2019 to 2020.

Several former pipeline employees told state investigators that the company was underreporting or failing to report spills of drilling mud so as to avoid costly shut-downs. One told investigators Shell had “a strategy” of underreporting spill amounts so as not to invite time-consuming inspections by the Department of Environmental Protection (DEP).

In addition, Shell allegedly failed to install real-time data logging devices on its drilling equipment, in violation of its state permit.

Henry filed 13 misdemeanor charges against Shell Pipeline at a magistrate’s court in Washington County.

In a statement, Henry said Shell “chose to ignore” laws designed to protect the environment.

“Pennsylvania’s environmental laws are in place to keep families and communities safe from harm caused by major construction projects, such as pipelines,” Henry said. “This company chose to ignore those laws and kept quiet issues that should have been disclosed to prevent potential impacts.”

Problems along the pipeline route

According to the court records, Shell contractors did not report to the DEP all of the spills, or “losses of circulation” of drilling mud.

The mud is used to lubricate the drill bit and stabilize the hole in horizontal directional drilling, a common technique used to bore holes underground for pipelines.

Drilling mud contains clay and sometimes chemical additives, and is classified as industrial waste under state law. According to the complaint, drilling mud ended up in several streams and a wetland along the pipeline’s route.

The Falcon pipeline is a 97-mile pipeline that sends ethane, a component of natural gas, to Shell’s Beaver County ethane cracker, which opened in 2022. About 45 miles of the pipeline were built in Pennsylvania, including Washington, Allegheny, and Beaver County. The ethane cracker itself received over $1 billion in state tax credits, the largest in state history.

Shell spokeswoman Virginia Q. Sanchez said the company is “reviewing the complaint and has been in contact” with the attorney general’s office.

“From the beginning of the construction of the Falcon Pipeline project, (Shell Pipeline) has cooperated with all relevant local, state, and federal agencies and the affected communities to ensure its pipeline was constructed in a safe and environmentally responsible manner,” Sanchez said, in an email. Sanchez said the company will “continue its cooperation with all relevant agencies” and the company was committed to “being a responsible neighbor.”

In 2022, the DEP fined Shell $670,000 fordrilling mud spills along the pipeline.

“DEP works with the Office of the Attorney General when necessary to ensure adherence to Pennsylvania’s environmental laws and regulations,” a DEP spokesperson, Lauren Camarda, said in an email, referring all questions about the complaint to the attorney general’s office.

According to the complaint, Shell and its contractors repeatedly under-counted how much drilling mud they lost during construction. In one case, a spill was initially reported to the DEP at 100 gallons, low enough to avoid a shutdown. Weeks later, the company reported 48,000 gallons were actually spilled that day.

Whistleblower complaint alerts DEP to problems

The investigation was kicked off by a whistleblower, Frank Jacob Chamberlin IV, who was fired from the Falcon Pipeline along with his spouse, in May 2019, after working four months on the project.

Chamberlin sent documentation of spills that underreported or not reported at all in 2019 to the DEP. He later told investigators “that the motivation for underreporting is done to avoid shut-downs, which costs Shell time and money.”

According to the criminal complaint, investigators spoke with a number of pipeline and DEP employees who affirmed Chamberlin’s basic allegation.

One former environmental consultant who was fired from the Falcon pipeline project told DEP investigators “that Shell was under-reporting or failing to report (spills) to avoid mandatory shut-down provisions” outlined by the pipeline’s permit, according to the complaint.

DEP inspectors found drilling log entries filed by the company, noting a release on April 24, 2019 of 150 gallons of drilling mud, even though photos indicated “a larger release.”

Another former pipeline worker, Sean Larson, a former coordinator of horizontal directional drilling on the pipeline, “confided to the DEP that Shell has a strategy of under-reporting IRs volumes so as not to arouse DEP suspisions and avoid work stoppages,” the complaint said. Larson told investigators from the attorney general’s office and DEP that a Shell Project Manager, Doug Scott, told him that “the less we give them (DEP), the better off we are.”

Larson told investigators there was “an unspoken understanding amongst the (drilling) inspectors to minimize the volume of a release because it would result in less down time while waiting for DEP to say they could resume drilling.”

Larson recalled one specific incident when Scott, the Shell project manager, warned him: “I’m not going to let you have the DEP jeopardize this project,” according to the complaint.

Larson was fired from the project in September, 2019. He told investigators he believed the firing was for being “too open and honest with the DEP.”

Another employee, Erica Lillian Kasundra, a regional project manager in a “Senior Pipeline Engineering role” for Shell, told investigators that she filed an ethics complaint with Shell, alleging that the pipeline contractor, Minnesota Limted LLC “was under-reporting fluid losses to the DEP.”

Kasundra told investigators that inspectors’ reports of volumes of drilling mud spilled, or ‘lost’, were different than those reported to the DEP.

She told investigators she thought the contractor was submitting loss volumes to the DEP “just under what would require a field visit from DEP.”

After filing the report, she reported being “cut out of the loop” on the pipeline project and was no longer invited to attend construction meetings.

Employees say company wanted to avoid costly shutdowns

Kasundra told inspectors that shut-downs of the pipeline construction project cost Shell $40,000 a day. With maximum fines at $10,000 under state laws, the company had little incentive to stop work, one DEP official told investigators.

Chamberlin, whose whistleblower complaint kicked off the probe, told investigators he once disputed the volume of a spill at one site “which was under-reported on the first day of the drill.”

After that, Chamberlin said he was “given the cold shoulder from the other inspectors.”

In another drilling incident, Chamberlin reported seeing a spill of 1500 gallons of drilling mud, only to be told by a supervisor to “make it 75 gallons” in his report.

Chamberlin told investigators “that the motivation for under-reporting is done to avoid shut-downs, which costs Shell time and money.”

After Chamberlin alerted DEP to the problems on the pipeline, a “water quality specialist” from the agency met with Eric DeLong, a construction manager for the pipeline project in November, 2019.

The DEP water quality specialist asked why the company wasn’t notifying the agency of spills until after the fact. According to the complaint, “DeLong attempted to argue the point that” if an inadvertent return (IR), or spill, happened twice in the same spot, “that’s expected. It’s not an IR anymore, it’s a controlled release.” The DEP specialist said she “had never heard this term used before, and stated it does not comport with DEP’s definition of an inadvertent return,” according to the complaint.

Another DEP supervisor in the agency’s waterways and wetlands program told investigators that Shell contractors insisted that as long as the mud that was spilling during an incident was getting cleaned up, it was considered ‘controlled’ or ‘managed’, even if no such term existed under the company’s construction permits.

The DEP water quality specialist told investigators that she suspected Shell or its contractors “made a financial decision to continue to drill and not report IRs. It was more beneficial to keep going and face the penalties.”

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