Around 100,000 tonnes of peat had been removed to create a site for the Corrib gas field in Bellanaboy, and activists claimed it has led to the exposure of aluminium deposits.
Shell-to-Sea spokesman John Monaghan said the aluminium was running into the local river and on to Carrowmore Lake, which is the main source of water for the Erris region.
“Shell are supposed to manage the surface water off the construction site but they haven’t done that. So since last October, you have this very high aluminium-content water running off the site into the Bellanaboy River and into Carrowmore Lake,” he said.
Due to problems with phosphate pollution from local agriculture, many locals have not drunk the tap water from the local supply for many years.
Mr Monaghan said the aluminium discharges made the problem even worse.
“Since Christmas, people had noticed something funny and had stopped drinking it. They suffered itching in the shower and saw a blue colour in the water in their baths.
“We don’t know if it’s directly associated with the aluminium but people are not drinking this water,” he said.
At a Shell-to-Sea demonstration outside the Customs House in Dublin, protesters offered cups of muddy-coloured water, taken from pools near the proposed refinery, Carrowmore Lake and the local water supply.
There were no takers for the yellow-coloured water.
Mayo County Council is monitoring the lake on a daily basis. It says treated drinking water is safe for human consumption.
But Mr Monaghan said the council was failing to acknowledge its own monitoring results, such as on February 1, when the level of aluminium in the water was 251 micrograms per litre, far in excess of the maximum permitted level of 200 micrograms per litre.
The construction of the gas refinery has been suspended since last year, along with all of the Corrib gas field project.
Shell agreed to suspend the work and withdraw an injunction against five local protesters, known as the Rossport Five, who spent 94 days in jail.
A report from an independent mediator Peter Cassells is expected shortly but the Rossport Five are not taking part in the process.