DOI proposes Arctic-specific drilling regulations for Alaska OCS

Feb. 20, 2015
The US Department of the Interior proposed regulations to ensure that oil and gas exploration on the US Arctic Continental Shelf occur safely and responsibly. The requirements, once they become final, would affect activity under the 2017-22 OCS Management Program, but not operations before that period.

The US Department of the Interior proposed regulations to ensure that oil and gas exploration on the US Arctic Continental Shelf occur safely and responsibly. The requirements, once they become final, would affect activity under the 2017-22 OCS Management Program, but not operations before that period.

The proposed regulations codify requirements that all Arctic offshore operators and their contractors are appropriately prepared for conditions there, and that operators develop an integrated operations plan that details all of an exploration program’s phases for purposes of advance planning and risk assessment, officials said.

They said that to emphasize safe and responsible exploration, the proposed rules also would require operators to submit region-specific oil spill response plans, have prompt access to source control and containment equipment, and have available a separate relief rig to promptly drill a relief well if a primary well’s control is lost.

The proposed rules continue 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. Comments will be taken for 60 days following its publication in the Federal Register. A draft environmental assessment, which the National Environmental Policy Act requires, also is available for comment.

In addition to codifying existing Arctic-specific standards, the proposals would establish the rules of the road for all companies interested in safe and responsible Arctic exploration, Assistant Interior Sec. for Land Minerals Management Janice Schneider said.

“In turn, these rules would facilitate exploration planning efforts and provide regulatory certainty, while ensuring that the US maintains its leadership position in overseeing safe exploration operations that protect this unique and sensitive environment,” she said.

Arctic conditions reflected

The proposals reflect challenging Arctic offshore conditions where sea ice is common and infrastructure is scarce, US Bureau of Safety and Environmental Enforcement Director Brian A. Salerno said. They drew heavily on requirements for Shell Offshore Co. for leases it acquired in a 2012 lease sale as well as subsequent discussions BSEE had with the Royal Dutch Shell PLC subsidiary, he told reporters during a Feb. 20 teleconference.

“This is a proposed rule. It does not affect activities that may take place this season,” Salerno said. “Our discussions with Shell are predicated on existing rules, with lessons learned from its previous experience. Its oil-spill response plan in 2015 would be a refresh from what it presented in 2012.”

He said the agency understands that the same-season relief rig proposal is “somewhat controversial” and urged everyone who is concerned about it to submit comments. “From our perspective, we believe that sets a practice for the Arctic that’s appropriate by making sure a rig is available to drill a relief well if necessary,” Salerno said.

The integrated operations plan that would be required differs from an exploration because it would not need to be formally approved, Salerno said. It would be designed to stimulate discussions by providing indications of how a well’s operator planned to conduct business, he said.

“It also would be a way for operators to think constructively and cohesively about how they plan to operate, and share that information at least 90 days in advance with a wide range of federal agencies,” added US Bureau of Ocean Management Director Abigail Ross Hopper, who also participated in the teleconference.

The proposed source control requirement refers to capping and containment capabilities which a consortium normally provides in the Gulf of Mexico but which an individual operator would need to line up to drill in the Beaufort or Chukchi seas, Salerno said.

Sea ice presence

The proposed requirements would use the presence of sea ice to determine when activity occurs, instead of the calendar, since this changes from year to year, he indicated. Salerno said operators would work with government agencies in this regard.

For emergency response, “we don’t say where something has to be, just how soon it takes for it to respond to a problem,” Salerno said. “This rule is focused on exploration. As we get further down the road toward production, we expect a follow-on rulemaking.”

The proposals produced immediate responses. The American Petroleum Institute is reviewing them to determine whether they provide a realistic Arctic energy production path, API Upstream Director Erik Milito said on Feb. 20. He initially expressed concern over the standby rig requirement when a capping stack or other containment methods could be just as effective.

“We intend to closely examine the government’s standards for allowing ‘alternative compliance measures’,” he said. “Due to the length and complexity of this rule—and since a detailed Arctic Research Study commissioned by the Secretary of Energy will not be available until Mar. 27—a 60-day comment period is unreasonable for all stakeholders.”

National Ocean Industries Association Pres. Randall B. Luthi said the “long-anticipated” proposals provided some consistency, reliability, and certainty for future US Arctic offshore oil and gas operations.

“Rules that take years to make tend not to reflect the best and newest technology being developed and used by industry on a daily basis,” he noted. “NOIA and its members will take advantage of the comment and review period to offer recommendations that ensure this regulation is robust and sensible now and in the future.”

US Senate Energy and Natural Resources Committee Chairwoman Lisa Murkowski (R-Alas.) said her staff was still reviewing the proposals. “Given the opposition this administration has shown so far to responsible resource development, I’m reserving judgment until it’s demonstrated that these regulations will not unnecessarily block investment,” she said.

Contact Nick Snow at [email protected].

About the Author

Nick Snow

NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.