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Shell critiques BSEE’s draft regs for Arctic offshore drilling
In conjunction with a review by the White House Office of Management and Budget of the Bureau of Safety and Environmental Enforcement’s proposed new Arctic offshore drilling safety regulations, on Sept. 10 Shell met with government officials and expressed concerns about some aspects of the draft drilling rules, according to information published on the OMB website.
In the wake of the Deepwater Horizon disaster, BSEE has been preparing new drilling regulations for the Arctic offshore. The OMB review forms part of the regulation development process. Shell and other companies interested in exploring Alaska’s Chukchi and Beaufort seas have been waiting to see the new regulations, to assess the potential impact of the regulations on the practicalities and economics of Arctic offshore drilling. Shell, in particular, is anxious to make a decision on whether to continue its Chukchi Sea drilling program in the summer of 2015.
A Shell presentation published on the OMB website in conjunction with a record of the Sept. 10 meeting makes it clear that Shell feels that the proposed regulations are too prescriptive, rather than setting performance-based safety targets that give some discretion to operators over how to meet safety requirements.
Three features Shell’s critique focuses on three features of the draft regulations that the company says will increase exploration costs without necessarily bringing improved safety. Those features are the need to have a back-up drilling rig available for the drilling of a relief well, if necessary, before the end of a drilling season; a drilling blackout period at the end of a season, to allow time for the relief well drilling, should need arise; and a requirement for a drilling operator to have available the necessary resources for the mechanical recovery of all spilled oil from a worst case oil-spill scenario.
A relief well is a secondary well drilled following a well blowout, to enable cement to be injected into the problem well bore, to permanently seal the well. Shell argues that since detailed records of well incidents began in 1971 there has been no instance of a relief well bringing a well blowout under control. And new well capping technology coupled with improved well integrity management can effectively reduce the probability of a loss of well control, the presentation says.
The late-season drilling blackout represents a major cost to an oil explorer while over emphasizing the value of drilling relief wells, the presentation says. Regulations should recognize alternatives to relief well drilling, with end-of-season dates reflecting an assessment of an operator’s ability to manage drilling risks, the presentation says.
The requirement for the capability to be able to conduct a mechanical recovery of all spilled oil ignores the relative effectiveness of alternative techniques such as the use of in-situ burning or oil dispersants. Moreover, this requirement would increase both the cost and the environmental impacts of a drilling operation by, for example, necessitating the deployment of more vessels, the presentation says.
Drilling regulations need to consider the unique features of Arctic operations, while also taking into account the net economic benefits to the United States of offshore Arctic oil development. And the high regulatory costs associated with the region are difficult to justify when comparing Arctic projects with opportunities elsewhere in the world, the presentation says.
- Alan Bailey
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