U.S. Gov’t issues final rule for Arctic offshore drilling

The U.S. Department of the Interior (DOI), acting through BOEM and BSEE, on Thursday issued the final rule regarding offshore drilling in Alaska, requiring operators to have containment equipment and a relief well rig ready in case of a blow-out.

The rule, focused on the offshore continental shelf within the Beaufort Sea and Chukchi Sea Planning Areas – Arctic OCS – aims to “help ensure the safe, effective, and responsible exploration of Arctic OCS oil and gas resources, while protecting the marine, coastal, and human environments, and Alaska Natives’ cultural traditions and access to subsistence resources.”

The Arctic-specific regulations focus solely on OCS exploratory drilling operations from floating vessels within the U.S. Beaufort and Chukchi Seas.

These rules require oil companies to ensure proper internal controls and planning for oil spill prevention, containment and responses – all issues identified by previous Interior reports regarding Shell’s 2012 exploration activities in the Arctic.

According to DOI, the regulations codify and further develop current Arctic-specific operational standards to ensure that operators take the necessary steps to plan through all phases of OCS exploration in the Arctic, including mobilization, maritime transport and emergency response, and the conduct of safe drilling operations while in theater.

Specifically, DOI says, the final rule requires operators to develop an Integrated Operations Plan addressing all phases of a proposed Arctic OCS exploration program and submit it to BOEM in advance of filing an Exploration Plan. The regulations require companies to have access to – and the ability to promptly deploy – source control and containment equipment, such as capping stacks and containment domes, while drilling below or working below the surface casing.

Operators also must have access to a separate relief rig able to drill a timely relief well under the conditions expected at the site in the event of a loss of well control; have the capability to predict, track, report, and respond to ice conditions and adverse weather events; effectively manage and oversee contractors; and develop and implement an Oil Spill Response Plan designed and executed in a manner that accounts for the unique Arctic OCS operating environment, and is supported with the necessary equipment, training, and personnel for oil spill response on the Arctic OCS.

“Conducting safe and environmentally responsible Arctic exploratory drilling operations presents a variety of technical, logistical and operational challenges,” said Bureau of Safety and Environmental Enforcement Director Brian Salerno. “This rulemaking seeks to ensure that operators prepare for and conduct these operations in a manner that drives down risks and protects both offshore personnel and the pristine Arctic environment.”

Sierra: Good, but not enough

In response, Director of Sierra Club’s Lands Protection Program Athan Manuel released the following statement:

“The Sierra Club thanks the Department of the Interior for putting forth the strongest standards we have seen to date.

“However, no amount of safeguards or standards can ever make drilling safe, which is why we will continue our efforts to ensure that the Arctic Ocean and the Gulf of Mexico, like the Atlantic Ocean, are protected from the dangers of offshore drilling.“

World Wildlife Fund (WWF) also issued a statement in response to the DOI announcement.

Brad Ack, Sierra’s senior vice president for oceans said: “The Department of Interior’s work developing safety regulations rightly acknowledges the extreme conditions in the Arctic. But offshore Arctic oil and gas are by far the riskiest fuel resources in the U.S. estate, with extreme cold, tumultuous seas, shifting ice and periods of extended darkness standing between us and them.

“Accidents can and do happen, and in this extreme environment, the only truly safe approach to protect the unique and fragile Arctic offshore environment is no drilling whatsoever.

“Beyond the immediate threats, opening the Arctic to offshore drilling undermines the President’s welcome and needed leadership on stabilizing the climate. Burning these fossil fuels would push us beyond any chance of dramatically reducing global carbon emissions, which is needed to stabilize the climate and our future. No safety regulations will change that fundamental equation.”

API: Rule could stifle innovation

American Petroleum Institute’s Upstream and Industry Operations Director Erik Milito said the rule was an unfortunate turn by the administration and “will continue to stifle offshore oil and natural gas production.”

He said API remains concerned about various regulatory activities related to offshore energy development including proposals for Arctic operations.

Milito said: “The U.S. oil and natural gas industry has a proven track record of working with the federal government to improve offshore safety. Thanks to industry efforts and investment, the United States is leading the world in oil and natural gas production as well as in reduced emissions, which are near 20-year lows. Certain proposed requirements may not improve safety and in fact may inhibit innovation and technological advancements. Any regulations that are published should achieve the objectives of protecting workers and the environment and promoting energy development.”

He said that the National Petroleum Council, at the request of the Secretary of Energy, released a report in 2015 that concluded that oil and natural gas “exploration and development in the Arctic is extensively regulated

Milito said: “Progressing offshore development in the Arctic would require around 60 permit types through 10 federal agencies. Regulations should be adaptive to reflect advances in technology and ecological research, and achieve an acceptable balance considering safety, environmental stewardship, economic viability, energy security, and compatibility with the interests of local communities. Prescriptive regulation may inhibit the development of new, improved technologies by suppressing the potential opportunity that drives advancement.”

“America’s energy resurgence is a once-in-a-generation opportunity that has put this country on a path toward economic growth, consumer benefits, environmental progress and a more secure energy future,” said Milito. “When combined with the vision put forward by the next five-year leasing program now being written by the Bureau of Ocean Energy Management, this administration has already fallen short of creating opportunities for new jobs, while also erasing millions in revenue to the government. Expanding offshore development is integral to the safe and responsible path for securing the domestic energy supplies future generations of Americans demand.”

Offshore Energy Today Staff