Obama Unveils Arctic Offshore Drilling Safety Rules

New Interior Department standards are supposed to make oil exploration off Alaska’s coast safer, but environmentalists say development is too risky.

National Journal
Ben Geman
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Ben Geman
Feb. 20, 2015, 9:54 a.m.

The In­teri­or De­part­ment un­veiled draft rules Fri­day aimed at pre­vent­ing and con­tain­ing oil spills in harsh Arc­tic wa­ters off Alaska’s shores, where big en­ergy com­pan­ies in­clud­ing Roy­al Dutch Shell hope to tap po­ten­tially huge pet­ro­leum de­pos­its.

The long-awaited off­shore-drilling rules are the latest of sev­er­al fed­er­al policies gov­ern­ing the Arc­tic re­gion’s en­vir­on­ment un­veiled in re­cent weeks, in­clud­ing a pro­pos­al to make the on­shore Arc­tic Na­tion­al Wild­life Refuge per­man­ently off-lim­its to drilling.

In­teri­or of­fi­cials say the tough Arc­tic cli­mate, the lim­ited port in­fra­struc­ture in the re­gion, and the sub­sist­ence hunt­ing needs of nat­ive com­munit­ies war­rant spe­cial rules to gov­ern off­shore drilling in the Beaufort and Chuk­chi seas off Alaska’s north­ern coast.

“En­ergy ex­plor­a­tion in the Arc­tic is unique. It is con­duc­ted in a very sens­it­ive and chal­len­ging en­vir­on­ment, where ex­treme weath­er, fri­gid wa­ters, and sea ice are com­mon, and where sup­port­ing in­fra­struc­ture and lo­gist­ic­al sup­port cap­ab­il­it­ies are lack­ing,” said Bri­an Salerno, dir­ect­or of In­teri­or’s Bur­eau of Safety and En­vir­on­ment­al En­force­ment, on a call with re­port­ers Fri­day.

In­teri­or has es­tim­ated that the Beaufort and Chuk­chi seas con­tain more than 20 bil­lion bar­rels of re­cov­er­able oil.

The rules are aimed at en­sur­ing that oil com­pan­ies and their con­tract­ors are pre­pared for con­di­tions in the Arc­tic, re­quir­ing an “in­teg­rated op­er­a­tions plan that de­tails all phases of the ex­plor­a­tion pro­gram for pur­poses of ad­vance plan­ning and risk as­sess­ment,” a sum­mary notes.

The rules re­quire de­vel­op­ment of “re­gion-spe­cif­ic” oil spill re­sponse plans. They re­quire com­pan­ies to have quick ac­cess to equip­ment to con­tain a po­ten­tial blo­wout and have a rig avail­able to drill a “re­lief well” — a second well that could halt the flow of oil from a blo­wout.

“The pro­posed rule con­tin­ues to al­low for tech­no­lo­gic­al in­nov­a­tion, as long as the op­er­at­or can demon­strate that the level of its safety and en­vir­on­ment­al per­form­ance sat­is­fies the stand­ards set forth in the pro­posed rule,” In­teri­or said.

Many en­vir­on­ment­al­ists op­pose Arc­tic oil de­vel­op­ment, ar­guing that oil com­pan­ies are not ready to drill safely in a re­gion that’s home to po­lar bears, bowhead whales, and oth­er en­dangered or fra­gile spe­cies.

Mi­chael LeV­ine of the group Oceana called the rules “an im­port­ant and ne­ces­sary first step to pro­tect­ing im­port­ant ocean re­sources.”

But tight­er reg­u­la­tions likely won’t be enough to mol­li­fy green groups that say the area should not have drilling rigs at all.

“We don’t know wheth­er com­pan­ies might be able to op­er­ate safely in the Arc­tic one day. We do know that they can’t do so now and that, there­fore, the gov­ern­ment has no busi­ness ap­prov­ing plans like the one Shell hopes to pur­sue,” said LeV­ine, the group’s Pa­cific seni­or coun­sel, in an email.

Shell, which has spent bil­lions of dol­lars on Arc­tic leases and de­vel­op­ment ef­forts, has been the most ag­gress­ive in seek­ing to drill in the Beaufort and Chuk­chi seas off Alaska’s north­ern coast, and began pre­lim­in­ary op­er­a­tions in 2012.

But the com­pany suffered a series of mis­haps that year, and nev­er won In­teri­or’s per­mis­sion to drill in­to oil-bear­ing sub­sea lay­ers. Prob­lems in­cluded dam­age to spill-con­tain­ment equip­ment dur­ing test­ing off Wash­ing­ton state’s coast, and a drilling rig that ran aground in Decem­ber 2012 on its way back from the Arc­tic re­gion.

The com­pany hopes to re­sume a scaled-back drilling pro­gram in the Chuk­chi this sum­mer. That’s be­fore the new rules will be com­pleted, but In­teri­or says it will hold Shell to a high safety bar even if those stand­ards have not been form­ally co­di­fied.

“We will be hold­ing them to the stand­ards that we have held them to be­fore, with up­grades and proof that they can do what they say they do be­fore they’re al­lowed to go up there,” In­teri­or Sec­ret­ary Sally Jew­ell told re­port­ers in early Feb­ru­ary.

Oth­er ma­jor com­pan­ies that hold drilling leases in the Arc­tic in­clude Cono­co­Phil­lips and Statoil.

Shell and Cono­co­Phil­lips, in closed-door meet­ings with White House aides last year, ar­gued that the rules should avoid what the com­pan­ies call overly pre­script­ive re­quire­ments.

The Amer­ic­an Pet­ro­leum In­sti­tute, a power­ful lob­by­ing group, on Fri­day at­tacked the pro­vi­sion in the draft rule that re­quires com­pan­ies to have a rig avail­able on standby to drill a re­lief well if needed.

“Oth­er equip­ment and meth­ods, such as a cap­ping stack, can be used to achieve the same sea­son re­lief with equal or high­er levels of safety and en­vir­on­ment­al pro­tec­tion. For this reas­on, it is un­ne­ces­sar­ily bur­den­some to ef­fect­ively re­quire two rigs to drill a single well,” said Erik Milito, a seni­or of­fi­cial with the group.

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