The Bureau of Safety and Environmental Enforcement and the Bureau of Ocean Energy Management, the two agencies within the Department of the Interior responsible for oversight of U.S. outer continental shelf oil activities, have released proposed new regulations for exploration drilling in federal waters of the Beaufort and Chukchi seas.
The agencies have been developing the regulations in the aftermath of the Deepwater Horizon disaster in the Gulf of Mexico - the draft regulations had been under review by the White House Office of Management and Budget since August and were released on Feb. 20. The regulations are subject to a 60-day comment period that will begin following publication in the Federal Register.
“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,” said Secretary of the Interior Sally Jewell. “These proposed regulations issued today extend the administration’s thoughtful approach to balanced oil and gas exploration in the Arctic, and are designed to ensure that offshore exploratory activities will continue to be subject to the highest safety standards.”
Performance-based and prescriptive
Interior says the new regulations contain a combination of performance-based and prescriptive standards that cover all phases of offshore exploration in the Arctic.
The proposed rule includes requirements that an offshore operator file an integrated operations plan for proposed drilling operations; that the operator of a drilling project has available a capping stack and containment dome for dealing with an out-of-control well; and that the operator has available a second rig for the drilling of a relief well, should a well loss-of-control incident arise.
“This proposed rule is designed to ensure safe energy exploration in unforgiving Arctic conditions,” said BSEE Director Brian Salerno. “It builds upon our existing Arctic-specific standards and experience with previous operations offshore Alaska, encourages further development of technology, and includes rigorous safeguards to protect the fragile environment.”
“As we make the vast majority of the Arctic oceans offshore Alaska available for oil and gas leasing, we have an obligation to provide the American people with confidence that these shared resources can be developed responsibly,” said BOEM Director Abigail Ross Hopper.
The regulations specifically relate to exploration drilling, rather than the drilling required for oilfield development or maintenance.
During a Feb. 20 news conference Salerno said that a final version of the regulations will not be completed before this summer’s Arctic offshore drilling season and will not, therefore, apply to Shell’s planned exploratory drilling in the Chukchi Sea this year. But, Salerno commented, provisions within the regulations draw heavily on requirements that were set during Shell’s 2012 Arctic drilling operations, on lessons learned from those operations and on discussions held with Shell regarding its 2015 plans. Thus, if Shell does drill in 2015, the company will need to comply with some new requirements that correspond to features of the new regulations, Salerno said.
Integrated operations plan
The purpose of the integrated operations plan, which, according to the proposed regulations, an Arctic offshore operator would have to file with Interior at least 90 days prior to filing an exploration plan, is to provide government agencies with early information about what an operator intends to do and to stimulate early discussions about the operator’s intentions.
“The whole purpose behind the operational plan is to provide early indications of how an operator proposes to approach a drilling season,” Salerno said.
The integrated operations plan would include information such as proposed vessel and equipment specifications; the schedule of operations; the drilling program objectives and timeline; contractor management arrangements; and plans for the preparation and deployment of spill response assets. The plan would not require formal agency approval, as is needed for an exploration plan.
Salerno said that the proposed regulations require that a company conducting drilling operations in the Arctic outer continental shelf has available in the Arctic the appropriate systems needed for the capping of a well following a loss-of-control incident, and for the containment of spilled oil, should the capping system fail. A capping stack, for sealing the wellhead, must be available for transfer to the well site within 24 hours of an incident, while cap-and-flow and containment systems, for gathering spilled oil and transferring the oil into surface vessels, must be available within seven days.
Salerno said that, given the remote nature of the Arctic, it would not be acceptable for an operator to contract the use of capping and containment systems that are stationed in the Gulf of Mexico.
Relief well capability
One particular feature of the proposed regulations is the mandating of a second drilling rig for the drilling of a relief well following a loss-of-control incident - a relief well is a secondary well drilled after a well blowout, to enable cement to be injected into the problem well bore, to permanently seal the well. The need for the rig and the need for a time window before the onset of the winter to drill a relief well add significant cost to an Arctic drilling operation. In a presentation to the Office of Management and Budget Shell argued there has been no recorded instance of a relief well bringing a well blowout under control, and that new well capping technology, coupled with improved well integrity management, can effectively reduce the probability of a loss of well control.
“We understand that the same-season relief rig is somewhat controversial,” Salerno said. “From our perspective that sets a level of protection for the Arctic that is necessary.”
Interior is also insisting that an operator has available sufficient mechanical oil recovery equipment to recover all oil spilled in a worst case spill scenario, even although there are alternative techniques, such as in-situ burning and dispersant use, that could be employed if appropriate.
And during drilling operations, it will be necessary to test the well blowout preventer every seven days rather than every 14 days, as is mandated elsewhere.
The discharge of drilling waste into the ocean has in the past proved controversial, especially in the context of Arctic offshore drilling. The proposed regulations would prohibit the discharge of any petroleum-based drilling mud and associated cuttings and would also give Interior’s regional supervisor the discretion to ban the discharge of water based mud.
And during drilling operations an operator must transmit drilling data to an onshore location, and make the data available to BSEE on request.
Varied responses
Shell, in its response to the proposed regulations, said that it supports regulations that further its concern about safety and environmental protection.
“We support regulations that further these imperatives in the Arctic, provided they are clear, consistent and well-reasoned,” said Shell spokeswoman Megan Baldino in a Feb. 23 email. “While we review the draft Arctic regulations put forward by the Department of Interior, we will continue to work with federal agencies, the State of Alaska, local communities, and contractors to develop a 2015 drilling program that achieves the highest technical, operational, safety and environmental standards.”
U.S. Sen. Lisa Murkowski, R-Alaska, chair of the Senate Committee on Energy and Natural Resources, said on Feb. 20 that she was still reviewing the proposed regulations and that she wants to evaluate what impact the regulations may have on the economic development of Alaska’s vast resources.
“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,” Murkowski said. “If this administration is truly committed to developing our Arctic resources then it is imperative that the Interior Department provide clear direction to Shell and the other leaseholders in the region on how they can proceed.”
Environmental organizations praised the tightening of drilling regulations for the Arctic offshore while also expressing concern about the risks associated with drilling for oil in Arctic conditions.
“We applaud the government for recognizing that existing oil and gas regulations are not adequate,” said Susan Murray, Oceana’s deputy vice president, Pacific. “The new rules clearly are needed and are an improvement, but they do not ensure safe and responsible operations in the Arctic Ocean. There is no proven way to respond to a spill in icy Arctic waters and, as Shell unfortunately demonstrated, companies simply are not ready for the Arctic Ocean.”
