The Interior Department proposed draft regulations Friday for offshore drilling in the Arctic that cement earlier agreements between the Obama administration and Royal Dutch Shell into rules for the entire oil and gas industry.
The rules from Interior’s Bureau of Safety and Environmental Enforcement and Bureau of Ocean Energy Management codify restrictions on when companies can drill in the Arctic and the equipment used for containing spill and large-producing wells. It also would require companies to submit region-specific spill response plans.
“The Arctic has substantial oil and gas potential, and the U.S. has a longstanding interest in the orderly development of these resources, which includes establishing high standards for the protection of this critical ecosystem, the surrounding communities, and the subsistence needs and cultural traditions of Alaska Natives,” Interior Secretary Sally Jewell said.
Interior officials said the rule largely mirrors what the department and Shell agreed to regarding drilling in the region. Shell, the first company to begin preparatory work for eventual drilling in the Arctic, had been following those practices under deals it struck with the safety bureau after a series of mechanical and equipment mishaps in 2012.
“There is a lot of commonality,” said Bureau of Safety and Environmental Enforcement Director Brian Salerno.
The draft rule, which now faces a 60-day comment period, would establish seasonal limits for drilling. Energy companies would need to leave the Arctic before seasonal ice begins to form in the fall. The proposal doesn’t touch whaling seasons, Bureau of Ocean Energy Management chief Abigail Hopper said, noting companies have traditionally made arrangements with local whaling commissions.
“There tends to be a window where operations can be conducted and it’s a three to four month period of time, and that varies from year to year,” Salerno said.
It also would require drillers to use a second rig used for drilling relief wells that are used to stem the flow of abnormally large releases of hydrocarbons. Companies would need to demonstrate its relief wells can be drilled within 45 days, a requirement an industry considers too onerous.
The resource potential in the Arctic is enormous, with the U.S. Energy Information Administration suggesting it holds 13 percent of the world’s oil reserves and 30 percent of natural gas deposits. On the U.S. side, BOEM estimates the Chukchi Sea holds 15 billion barrels of recoverable oil and 78 trillion cubic feet of recoverable natural gas. The Beaufort Sea could hold 8 billion barrels of oil and nearly 28 trillion cubic feet of natural gas.
Eight oil and gas companies hold leases in the U.S. Arctic, but many of them have shelved plans until the new regulations are in place. Republicans, chiefly Senate Energy and Natural Resources Committee Chairwoman Lisa Murkowski of Alaska, have chided the administration for taking too long on the regulations as other nations such as Russia and Norway ramp up Arctic production.
The industry welcomed the guidance from the rules. “This long-anticipated rule provides at least some certainty, consistency and reliability for offshore oil and gas production in the resource-rich Arctic region,” said Randall Luthi, president of offshore drilling group National Ocean Industries Association.
The news comes weeks after the Obama administration announced it would allow Arctic drilling in its draft five-year offshore plan that would run 2017 through 2022. That proposal, however, took 9.8 million acres of the Beaufort and Chukchi seas off the market.
Environmental groups said the rules were a step in the right direction. But they weren’t pleased, noting that the Arctic’s fragile and complex ecosystem is more susceptible to damage from spills than other areas.
“The changes that will come about with these regulations are important, but they are just around the edges,” Mike LeVine, Pacific senior counsel with Oceana, told the Washington Examiner. “These rules and the withdrawals in the Beaufort and Chukchi are really important precedents set by this administration, but that will in no way deter a company like Shell.”
Shell CEO Ben van Beurden said last month that his company plans to spend $1 billion drilling exploratory wells this summer if it gets the OK from the federal government. The company began boring wells in 2012, but iced its Arctic activity after a series of mechanical problems and its Kulluk drilling rig running aground at the end of that yeary.
The regulations proposed Friday stem from those blunders.
A 2013 Interior diagnostic of Shell’s miscues revealed a lax culture of safety checks and oversight that led to repeated air emissions violations, a containment dome used to cap leaks that failed in testing and other equipment-related delays. Later that year, the White House released a framework on Arctic energy development.
This article was originally published at 2:49 p.m. and has been updated.
