Feds propose Arctic drilling mandates

WASHINGTON — The Obama administration on Friday moved to tighten requirements for Arctic drilling and force oil companies looking for crude under the remote, icy waters to have critical emergency equipment nearby.

The Interior Department’s proposal would for the first time impose specific mandates on offshore drilling in isolated U.S. Arctic waters — updating rules that were built decades ago for the much more temperate Gulf of Mexico.

Because the proposed rule could take more than a year to formalize, it isn’t expected to govern Shell Oil Co.’s planned exploratory drilling in the Chukchi Sea this summer. But the measure already reflects many of the steps the company has taken voluntarily and conditions that regulators have separately laid out for Shell in response to mishaps during its 2012 operations.

For instance, companies drilling into the Chukchi and Beaufort seas north of Alaska would be required to be able to “promptly deploy” emergency control and containment equipment in case of a spill or subsea blowout. In the case of a runaway well, a capping stack would have to be on site within 24 hours, and more sophisticated capping systems would have seven days.

Companies drilling in the Arctic also would have to have a separate rig located close enough to bore a relief well in case of an emergency, like the blowout of BP’s Macondo well in the Gulf nearly five years ago.

The safeguards are necessary in the Arctic, where the nearest deep-water port is 1,000 miles away and critical infrastructure is not already in place, said Bureau of Ocean Energy Management Director Abigail Hopper.

“The Arctic outer continental shelf isn’t like the Gulf of Mexico, where generally mild weather conditions and an established industry presence have created an extensive infrastructure and logistical support and allow for nearly year-round operations,” Hopper told reporters on a conference call Friday. “Instead, the Chukchi Sea and Beaufort Sea . . . are incredibly remote, vastly underdeveloped and subject to extreme geophysical conditions.”

Under the Interior Department’s proposal, companies would have up to 45 days to get a relief rig on site and finish those emergency drilling operations — a time frame that regulators said could allow the equipment to be stationed a 20-day journey away, at the deep-water port in Dutch Harbor, Alaska. Under the Interior Department’s proposal, the relief rig could also be working on another well nearby.

Environmentalists have argued that it is essential to keep that emergency equipment on hand, since infrastructure is sparse in the Chuckhi and Beaufort seas. They note that unpredictable weather can lengthen transit times and thwart even the best-planned emergency interventions.

“If a spill occurs towards the end of Shell’s drilling window, the sea ice won’t wait for the company to drill a relief well,” said Tim Donaghy, a senior research specialist with Greenpeace.

Although Shell plans to put two rigs to work in the Chukchi Sea this summer — which would satisfy a relief rig requirement — the company has argued against codifying the mandate.

Read more: Shell and ConocoPhillips ask White House for flexibility in Arctic

The American Petroleum Institute on Friday also raised a red flag on the relief rig requirement, with upstream director Erik Milito calling it “unnecessarily burdensome to effectively require two rigs to drill a single well.”

“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,” Milito said.

Containment caps were used atop BP’s failed Macondo well in the Gulf of Mexico to temporarily corral leaking oil in 2010, but the ultimate, lethal prescription was a relief well drilled to intercept it.

Bureau of Safety and Environmental Enforcement Director Brian Salerno said the agency recognizes a same-season relief rig requirement is “controversial.”

“From our perspective, that sets a level of protection for the Arctic that is necessary,” he told reporters. “If there were to be an uncontrolled well event, we’d want to make sure that the well can be secured within the drilling season. This provides that level of assurance.”

Marilyn Heiman, director of the U.S. Arctic program at Pew Charitable Trusts, said a relief rig could be essential in some cases — such as when an underground formation is at risk of rupturing and a capping stack cannot be used.

“We saw in the Gulf that sometimes a capping stack doesn’t work and sometimes a containment system doesn’t work,” Heiman said. “If you need it, and it’s September, and your relief rig is in Cook Inlet, you don’t have time to get there before the ice moves in.”

The administration is also proposing a requirement that companies stash sufficient booms, skimmers and other equipment nearby to mechanically clean up 100 percent of the estimated worst case discharge of crude from their wells.

Regulators rejected a plea from Shell and ConocoPhillips to allow chemical dispersants — not just mechanical recovery equipment — to count toward that 100 percent target.

Scientists have cast doubt on the efficacy of oil spill removal equipment even in relatively open Arctic waters, especially when water is slushy. Freezing ice can trap pockets of oil, locking it beyond the reach of traditional cleanup equipment and preventing it from naturally breaking down over time.

A National Research Council report issued last year concluded that the United States is ill prepared to tackle an oil spill in the Arctic, and more research is needed.

Read more: US not ready for Arctic oil spills

Some environmentalists have asked the Obama administration to block further Arctic drilling, saying the activity could jeopardize a fragile ecosystem and a subsistence way of life for the people who hunt and fish in the same waters.

“The very hazardous conditions that make these standards necessary also make drilling in the Arctic inherently risky,” observed Dan Ritzman, an Alaska program director for the Sierra Club.

According to the proposed rule, the mandates “would further the nation’s interest in exploring frontier areas, such as those in the Arctic region” while establishing “specific operating models and requirements for the extreme, changing conditions that exist” there.

The rule lays out some performance-based standards — rather than locking in specific technologies — to allow further innovation, Salerno said.

The proposed rule also would require companies to:

  • develop an oil spill response plan specifically tailored for the Arctic, including strategies for cleaning up spilled crude amid sea ice.
  • conduct enhanced oil spill response training.
  • develop integrated operations plans.
  • have the capability to predict and track changing ice conditions and bad weather.

The measure does not specifically propose requiring companies to pause drilling while whales are migrating or during some hunting, though Shell complied with such a timeout in the Beaufort Sea in 2012.

It also does not set out specific dates defining the window for exploratory oil drilling in the Chukchi and Beaufort seas, though regulators have traditionally allowed that activity only during the open water season, when the area is not encased in a thick layer of ice.

Shell officials have stressed that the shallow wells it aims to drill in the U.S. Arctic would target low-pressure formations — unlike the more challenging and deep-water wells now being bored on the Gulf’s frontier.

But with the rule proposal unveiled Friday, administration officials are affirming that even a slight risk of an accident in the remote region merits many safeguards.

“Although the probability of a catastrophic oil spill is low, the Deepwater Horizon oil spill demonstrated that even such low-probability events can have devastating economic and environmental results when they occur,” the proposed rule says. “The benefits of the proposed rule include reducing such risks associated with Arctic offshore operations.”

Shell spokesman Curtis Smith said the company was reviewing the draft regulations.

“Of paramount concern in all of our operations is safety and environmental protection,” Smith said. “We support regulations that further these imperatives in the Arctic, provided they are clear, consistent and well-reasoned.”

The company is on track to spend $1 billion to drill exploratory oil wells in the Chukchi Sea this summer. But those plans depend on the company securing government approval of its broad exploratory plan and on winning individual drilling permits.

Read more: Shell planning to restart Arctic drilling this year

They also are contingent on the resolution of a longstanding legal challenge of the government’s 2008 sale of Chukchi Sea drilling leases to Shell and other companies.

The Bureau of Ocean Energy Management recently completed a new environmental analysis of that seven-year-old sale in a bid to satisfy a federal court ruling that the first version was inadequate.

But the final decision on whether to affirm, modify or vacate that sale rests with Interior Secretary Sally Jewell. She could issue a “record of decision” on the auction as soon as March 25.