Interior Dept. may have draft rules for Arctic by year-end


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The U.S. Interior Department plans to have a draft of new rules to regulate Arctic offshore exploration completed by the end of the year, Acting Assistant Secretary for Lands and Minerals Tommy Beaudreau said on June 6 during a meeting in Anchorage.

“It’s an aggressive schedule, and the proposals would still have to go through a formal rulemaking,” Beaudreau said.

Beaudreau, who is also Director of the U.S. Bureau of Ocean Energy Management, or BOEM, was in Alaska June 6 and 7 with other Interior officials for two days of public “listening sessions” to solicit ideas on Arctic offshore regulation.

Following the June 6 meeting in Anchorage, the group went to Barrow  for a second listening session June 7.

The new regulations are important to Shell, ConocoPhillips and Statoil, who have all said they are awaiting the new Arctic rules before making further commitments on offshore exploration in the region.

Having Arctic-specific federal regulations was a key recommendation of a report issued earlier this year by an Interior Department team, also led by Beaudreau, which studied Shell’s trouble-plagued 2012 Arctic exploration program.

At the meeting in Anchorage, Beaudreau said his agency is considering rules that will codify some specific requirements imposed on Shell as permit conditions, as well as to propose new ones.

Two areas of interest for the agency for the special Arctic rules are on well control issues and requirements for subsea spill containment systems that are tested, and also requirements for a rig to be available for a relief well, Beaudreau said.

Both requirements were laid on Shell in 2012 as conditions of permits. Shell was unable to get its undersea containment system built and tested in time to get it to the Arctic last year, so only “top holes,” or the upper parts, were drilled on two wells by the company.

A third area of interest for a new rule, Beaudreau said, could be a requirement for “resource sharing” if there are multiple operators offshore. Shell was the only operator in 2012, but ConocoPhillips and Statoil also have leases and could be conducting simultaneous operations in the future.

“Any time there are multiple vessels moving there are more risks, so we see this as something that is sensible,” Beaudreau said.

In an emergency it is standard procedure for one company to aid another but Beaudreau may have been talking about a broader requirement. An example may be if multiple companies working offshore were required to contract with a single tug operator.

Interior’s review of the 2012 session faulted Shell on some points and recommended that offshore operators exercise more effective management of contractors — a reference to the containment system that fell behind schedule — but also that the government itself should do a better job of coordination among various federal agencies, state and local government agencies, Beaudreau said.

Industry and business leaders offered comments at the June 6 hearing. Lucas Francis of Shell urged BOEM to make rules performance-based, setting out goals to be achieved, and not prescriptive, with detailed requirements for procedures.

Companies also warned against new requirements that specific equipment be used by operators.

Rick Rogers, executive director of the Resource Development Council, reinforced the points made by Shell:

“The (exploration and production) companies operating in the Alaska (outer continental shelf) are among the most capable and sophisticated in the world. The standards should avoid being overly prescriptive, and instead set performance metrics, which allow innovative companies to determine their best technologies to meet the standards,” Rogers said.

Daniel Lum, an Inupiat who is critical of offshore drilling, said industry should be required to conduct demonstrations of spill-containment systems under actual Arctic conditions, not more benign waters in Southcentral Alaska or the U.S. Pacific Northwest.

Lois Epstein, Arctic Programs Director for the Wilderness Society, suggested the agency impose seasonal drilling limits in regulations along with provisions for public review of spill prevention plans, which she said are now lacking, along with public disclosure of the results of spill drills.

Epstein, who is also an engineer and a member of the U.S. Bureau of Safety and Environmental Enforcement’s Ocean Safety Advisory Committee, also urged a significant increase in financial responsibility requirements for Arctic operators.

In his remarks, RDC’s Rogers said that despite Shell’s 2012 problems the industry, including Shell, has a long and safe track record in the Arctic.

“Thirty wells have been drilled in the Beaufort Sea and five in the Chukchi Sea all without incident, not to mention decades of responsible oil and gas exploration and production in Cook Inlet. These wells were drilled in the 1980s, utilizing older technology,” Rogers told the Interior officials.

Many of the Beaufort Sea and Chukchi Sea wells drilled in the 1980s were drilled by Shell.

Tim Bradner can be reached at tim.bradner@alaskajournal.com.

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