Interior Issues Final Regulations for Any Future Exploratory Drilling in U.S. Arctic WatersBy MARY KAUFFMAN
July 07, 2016
In response to today's announcement, Alaska Governor Bill Walker (I) said in a prepared statement, “We will look very carefully at the regulatory package to understand the implications for companies interested in exploring in the Arctic. One risk profile does not fit all projects. Flexibility is necessary to accommodate different types of programs. After the time the Interior Department has spent on this regulatory package, I hope the administration moves to expedite Chukchi and Beaufort lease sales.” “With the United States as Chair of the Arctic Council, we are committed to demonstrating our leadership in governance and activities in the Arctic Region,” said Assistant Secretary Schneider. “The regulations we are issuing today support the Administration’s thoughtful and balanced approach to any oil and gas exploration in the Arctic region. The rules help ensure that any exploratory drilling operations in this highly challenging environment will be conducted in a safe and environmentally responsible manner, while protecting the marine, coastal, and human environments, and Alaska Natives’ cultural traditions and access to subsistence resources.” According to the U.S. Department of the Interior, 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. 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. “The unique Arctic environment raises substantial operational challenges,” said Bureau of Ocean Energy Management (BOEM) Director Abigail Ross Hopper. “These new regulations are carefully tailored to ensure that any future exploration activities will be conducted in a way that respects and protects this incredible ecosystem and the Alaska Native subsistence activities that depend on its preservation.” “I am reviewing this rule to determine whether the department took into account the substantive comments it received from Alaskans, including comments that were intended to resolve real defects in the draft proposal,” U.S. Senator Lisa Murkowski (R-AK) said in a prepared statement. “What we know already is that one company invested nearly $8 billion to complete just one well while operating under guidelines that inspired this rule – which means it is hardly a recipe for successful production in the Arctic.” Murkowski, the Chairman of the Senate Energy and Natural Resources Committee, also said the rule finalized today by the Department of the Interior revises and adds new requirements to regulations for exploratory drilling and related operations in the Arctic OCS. While claiming to increase safety and environmental standards, Interior’s rule appears more likely to reduce investment and harm energy production in the region. “This rule should be a positive sign for the administration’s willingness to offer new leases in the offshore Arctic, but instead it continues to hint toward an even more uncertain future for the regulatory regime in this region,” Murkowski said. “I am dismayed by the regulatory onslaught the administration is launching on American energy production in its final days.” Murkowski said the Beaufort and Chukchi Seas contain an estimated 23.6 billion barrels of oil and 104.4 trillion cubic feet of natural gas. According to a 2014 poll, Murkowski said an overwhelming majority of Alaskans support the development of those resources. Specifically, 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.” These regulations complement the previously announced Final Well Control Rule, released in April. While the Well Control Rule applies across the entirety of the OCS, including the Arctic OCS, many of the provisions of the final Arctic regulations announced today go beyond the scope of the Well Control Rule and address the unique challenges posed by the Arctic operating environment, especially provisions that put in place systems and processes to further reduce risk and provide rigorous safeguards for Alaska’s North Slope coastal communities and the sensitive Arctic environment. Interior’s Bureau of Ocean Energy Management and the Bureau of Safety and Environmental Enforcement developed the regulations with significant public input from the State of Alaska, North Slope communities, Alaska Native tribes and organizations, industry, and non-governmental organizations. An Environmental Assessment, pursuant to the National Environmental Policy Act, was also prepared in conjunction with this rule and more than 100,000 individual comments were received on the Notice of Proposed Rulemaking. Although there have been Arctic lease relinquishments, operators continue to hold a number of leases in the Beaufort Sea Planning Area and one in the Chukchi Sea Planning Area that have not expired. Finalizing these regulations will ensure that, should operators decide to act upon their leases or any future leases in these Planning Areas, they will operate with robust safety and environmental protections in place.
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