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Interior Issues Proposed Regulations For Arctic OCS Oil, NatGas Drilling

Proposed regulations issued Friday by the Bureau of Safety and Environmental Enforcement (BSEE) and the Bureau of Ocean Energy Management (BOEM) would add to and revise rules for Arctic Outer Continental Shelf (OCS) oil and natural gas drilling activities that mobile offshore drilling units and related operations use during the open-water drilling season.

The proposedrule, which focuses solely on the OCS within the Beaufort Sea and Chukchi Planning Areas, "is designed to ensure safe, effective and responsible exploration of Arctic OCS oil and gas resources, while protecting the marine, coastal and human environments, and Alaska Natives' cultural traditions and access to subsistence resources," the agencies said.

Department of Interior (DOI) engagement with stakeholders has revealed "the need for new and revised regulatory measures for exploratory drilling conducted by floating drilling vessels and ‘jackup rigs’ (collectively known as mobile offshore drilling units or MODUs) on the Arctic OSC...BOEM and BSEE have undertaken extensive environmental and safety reviews of potential oil and gas operations on the Arctic OSC. These reviews, along with concerns expressed by environmental organizations and Alaska Natives, reinforce the need to develop additional measures specifically tailored to the operational and environmental conditions of the Arctic OCS."

The proposed rule would add to and revise 30 CFR Parts 250, 254 and 550 for Arctic OSC oil and gas activities, the agencies said. It would ensure that operators:

  • Design and conduct exploration programs "in a manner suitable for Arctic OCS conditions,"
  • Develop integrated operations plans that would address all phases of their proposed Arctic OCS exploration programs and submit them to DOI at least 90 days in advance of filing exploration plans;
  • Have access to and the ability to promptly deploy source control and containment equipment while drilling below, or working below, surface casing;
  • Have access to a separate relief rig located so that it would timely drill a relief well in the event of a loss of well control under conditions expected at the site;
  • Have 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 that is designed and executed in a manner suitable for the unique Arctic OCS operating environment and has the necessary equipment, training and personnel for oil spill response on the Arctic OCS.

"Using a combination of performance-based and prescriptive standards, the proposed regulations codify and further develop current Arctic-specific operational standards that seek to ensure that operators take the necessary steps to plan through all phases of offshore exploration in the Arctic, including mobilization, drilling, maritime transport and emergency response, and conduct safe drilling operations while in theater," the agencies said.

"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 DOI Secretary 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."

"We’re still reviewing the draft regulations released today to see what impact they could have on the economic development of our vast Arctic resources," said Sen. Lisa Murkowski (R-AK), chairman of the Senate Energy Committee and a vocal critic of recent Obama administration decisions affecting oil and gas development in her state. "Responsible development of our Arctic resources is important the economic future of both Alaska and the nation as a whole. 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.

"If this administration is truly committed to developing our Arctic resources then it's imperative that the Interior Department provide clear direction to Shell and the other leaseholders in the region on how they can proceed. It's important that any changes to existing regulations covering the Chukchi and Beaufort seas allow companies the flexibility to respond to changing conditions and for the deployment of new drilling technologies."

Randall Luthi, president of the National Ocean Industries Association (NOIA), offered some support for the proposed rule.

"This long-anticipated rule provides at least some certainty, consistency and reliability for offshore oil and gas production in the resource-rich Arctic region...We are hopeful that following a thoughtful dialogue with industry experts during the comment period, the final rule will encourage more production on federal lands offshore Alaska, which will benefit consumers and the people of Alaska," Luthi said.

The proposed regulations come less than a month after Jewell and BOEM Director Abigail Ross Hopper released a draft strategy for offshore oil and natural gas leasing that included for the first time a portion of the Mid- and South Atlantic OCS from Virginia to Georgia (see Daily GPI, Jan. 27). That Draft Proposed Program seeks public comment on 14 potential lease sales in eight planning areas -- 10 sales in the Gulf of Mexico (GOM), three off the coast of Alaska (one each in the Chukchi Sea, Beaufort Sea, and Cook Inlet areas), and one in areas offshore Virginia, North and South Carolina and Georgia.

Not included in those proposed lease sales are 9.8 million acres of the Beaufort and Chukchi seas that President Obama recently designated off limits to oil and natural gas leasing "in order to protect areas of critical importance to subsistence use by Alaska Natives, as well as for their unique and sensitive environmental resources." In December, Obama extended indefinitely a four-year-old freeze for oil and natural gas leasing in the waters of Alaska's Bristol Bay, a move criticized by industry representatives (see Daily GPI, Dec. 17, 2014). The North Aleutian Basin Planning Area, which includes Bristol Bay, consists of about 32.5 million acres, a portion of which was leased in the mid-1980s but never developed due to litigation, according to the White House.

The Obama administration last month recommended designation of core areas and the coastal plain of the Arctic National Wildlife Refuge (ANWR) as wilderness, a move that infuriated Alaska's independent governor and its all-Republican contingent in Congress (see Daily GPI, Jan. 26). If approved by Congress, the wilderness designation would be the largest in Interior's history and would designate nearly all of ANWR's total 19.8 million acres as wilderness. Currently, more than 7 million acres of ANWR are managed as wilderness.

The OCS leasing plan now in place was published in mid-2012 and extended to 2017 (see Daily GPI, June 29, 2012; Dec. 18, 2012). That plan proposed 15 lease sales in six offshore areas, including three in the Western and Central GOM, and the portion of the Eastern GOM not under a Congressional moratorium (see Daily GPI, Dec. 2, 2010). The program also included three potential lease sales in Alaska's Cook Inlet, Chukchi and Beaufort seas. No sales were scheduled for the Atlantic or Pacific coasts.

A 60-day public comment period on the newly proposed rule begins when it is published in the Federal Register.

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