Obama Administration announces new Arctic drilling rules

Shell’s Polar Pioneer leaving Dutch Harbor on Oct. 12, heading for Washington state. (Photo by John Ryan, KUCB - Unalaska)
Shell’s Polar Pioneer leaving Dutch Harbor on Oct. 12, heading for Washington state. (Photo by John Ryan, KUCB – Unalaska)

The Obama Administration on Thursday issued new regulations covering offshore drilling in the Arctic.

The new rules will hold oil companies in the Arctic to a higher standard than those drilling in other regions, including the Gulf of Mexico.

But currently, there are no companies with plans to drill in the Arctic Ocean off Alaska — and that seems unlikely to change any time soon.

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The Department of the Interior began formulating the regulations after Shell’s first effort to drill in the Arctic in 2012 resulted in a series of serious mishaps.

Speaking on a conference call with reporters on Thursday, Assistant Interior Secretary Janice Schneider called the new rules “world class.”

“This rule seeks to set the highest safety and environmental standards for companies interested in Arctic exploration,” Schneider said.

The regulations essentially codify the rules imposed on Shell during its 2015 drilling season, including a requirement that companies keep a second rig available at all times to drill a relief well.

Shell called those regulations a contributing factor in its decision to pull out of the Arctic last fall.

But Abigail Hopper, Director of  the Bureau of Ocean Energy Management, said the rules were prompted by mistakes that Shell itself made in 2012.

“We realized that one of the challenges was a lack of contractor oversight, and a deficit in planning the entire operation,” Hopper said. “So we have required…what’s called an integrated operations plan. That is a plan from the very beginning of the program, all the way through demobilization at the very end.”

The Interior Department is also deciding whether to include the Arctic in its next round of offshore lease sales. That is a separate decision, expected later this year.

The new regulations only cover floating operations, not near-shore projects like Hilcorp’s Northstar unit or its proposed Liberty project, which drill from man-made gravel islands in the Beaufort Sea.

The regulations prompted predictable reactions from industry and environmental groups.

The Center for Biological Diversity emailed out a statement saying, simply, “Arctic drilling can’t be made safe, period.”

But other environmentalists called the regulations a good first step.

“If, in fact, companies ever do want to come back and explore in the Arctic Ocean, they’ll know what the basic safety and prevention requirements are, and they’ll be substantially improved over what they used to be,” said Michael LeVine, of the conservation group Oceana.

But, Levine said, he doesn’t believe any company is truly prepared yet to deal with risks like oil spills in Arctic waters.

Meanwhile, Kara Moriarty of the Alaska Oil and Gas Association repeated her organization’s warning that regulations will slow Arctic development.

“Obviously we’re still trying to sift through all 348 pages,” Moriarty said. “But at first blush, it does appear the federal government is creating additional cumbersome regulations that will make it more challenging to entice companies back to the Arctic when oil prices rebound.”

It remains an open question what it would take to entice companies back to the Arctic, regulations or no regulations.

With the exception of Hilcorp’s near-shore operations, no company currently has any plans to drill in the Chukchi or Beaufort Seas.

In the nine months since Shell announced it was abandoning its nearly decade-long quest in the region, several companies, including ConocoPhillips, Norway’s Statoil, and the Spanish company Repsol have relinquished leases: of more than 700 leases purchased in the Arctic since 2003, only 43 are still held by companies.

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Rachel Waldholz covers energy and the environment for Alaska's Energy Desk, a collaboration between Alaska Public Media, KTOO in Juneau and KUCB in Unalaska. Before coming to Anchorage, she spent two years reporting for Raven Radio in Sitka. Rachel studied documentary production at the UC Berkeley Graduate School of Journalism, and her short film, A Confused War won several awards. Her work has appeared on Morning Edition, All Things Considered, and Marketplace, among other outlets. rwaldholz (at) alaskapublic (dot) org | 907.550.8432 | About Rachel