Updated: US Arctic drilling regulations issued

July 8, 2016

New and "final" regulations regarding drilling in the US Arctic have been jointly issued by the country's authorities, including a requirement to have a relief rig on standby and containment equipment. 

Image from BSEE Twitter.

The regulations have been drawn up "to ensure that any future exploratory drilling activities on the US Arctic Outer Continental Shelf (OCS) are conducted under the highest safety and environmental standards and subject to strong and proven operational requirements," the US Department of the Interior (DOI) said in a statement.

The Arctic-specific regulations focus solely on Outer Continental Shelf (OCS) exploratory drilling operations from floating vessels within the US Beaufort and Chukchi Seas. 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, according to the DOI statement.

"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," the DOI said.

The rules require oil companies to ensure proper internal controls and planning for oil spill prevention, containment and responses. They also require operators to have access to and the ability to promptly deploy source control and containment equipment while drilling and access to a separate relief rig able to drill a timely relief well and to develop an integrated operations plan to address all phases of proposed Arctic exploration.    

The regulations were released by the US DOI, the Bureau of Ocean Energy Management Director and the Bureau of Safety and Environmental Enforcement (BSEE). 

However, the American Petroleum Institute (API) and the National Ocean Industries Association (NOIA), which represents the offshore energy industry, both say the rule is counter productive. 

Industry group NOIA said that despite taking years to write, the new rules do not accurately reflect current industry capabilities and include unnecessary requirements, such as same-season relief wells, that may not be needed.

Requirements imposed by the rule "could thwart industry innovation and development of new technology, and may not actually increase operational safety," NOIA President Randall Luthi said in a statement.

“Arctic oil and natural gas development is integral to national energy security and a vital source of jobs for the people of Alaska, and should remain so. Former military leaders have urged the administration to keep the Arctic in the 2017-2022 offshore leasing program, citing important national security implications. With an estimated 23.6 billion barrels of oil and 104.4 Tcf of natural gas in the Beaufort and Chukchi Seas, a strong Arctic offshore program can ensure that both Alaska and the lower 48 benefit from jobs, revenue and energy security,” Luthi said.

“The offshore industry has shown that oil and natural gas development can be done safely in Arctic conditions. Even as we review the provisions of this rule, other countries, including Canada, Greenland, Russia and Norway, are already taking steps to explore and develop Arctic OCS resources,” Luthi concluded.

Upstream and Industry Operations Director Erik Milito said the rule was an unfortunate turn by the administration and will continue to stifle offshore oil and natural gas production. We remain concerned about various regulatory activities related to offshore energy development including today’s proposals for Arctic operations.

“The US oil and natural gas industry has a proven track record of working with the federal government to improve offshore safety. Thanks to industry efforts and investment, the United States is leading the world in oil and natural gas production as well as in reduced emissions, which are near 20-year lows. Certain proposed requirements may not improve safety and in fact may inhibit innovation and technological advancements. Any regulations that are published should achieve the objectives of protecting workers and the environment and promoting energy development,” Milito said.

“Progressing offshore development in the Arctic would require around 60 permit types through 10 federal agencies. Regulations should be adaptive to reflect advances in technology and ecological research, and achieve an acceptable balance considering safety, environmental stewardship, economic viability, energy security, and compatibility with the interests of local communities,” Milito said. “Prescriptive regulation may inhibit the development of new, improved technologies by suppressing the potential opportunity that drives advancement.”

“America’s energy resurgence is a once-in-a-generation opportunity that has put this country on a path toward economic growth, consumer benefits, environmental progress and a more secure energy future. When combined with the vision put forward by the next five-year leasing program now being written by the Bureau of Ocean Energy Management, this administration has already fallen short of creating opportunities for new jobs, while also erasing millions in revenue to the government. Expanding offshore development is integral to the safe and responsible path for securing the domestic energy supplies future generations of Americans demand,” Milito concluded.

The Interior’s assistant secretary Janice Schneider assured that drilling will be conducted in a safe, and environmentally responsible manner.

“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 Schneider. “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.” 

Other requirements in the rule include having 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.

BSEE Director Brian Salerno said that the new and final rules lowers risks and adds protection.

“Conducting safe and environmentally responsible Arctic exploratory drilling operations presents a variety of technical, logistical and operational challenges,” said 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.”

According to the three organizations, the new regulations complement a 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.


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