Proposed regulations by the Obama administration would set performance and safety standards for companies engaged in exploratory drilling in the U.S. Arctic Outer Continental Shelf.
The proposed rules apply only to the Beaufort Sea and Chukchi Sea planning areas. The proposal comes in advance of the planned sale of leases by the Bureau of Ocean Energy Management (BOEM) of sections of the Outer Continental Shelf that contain 90 percent of technically recoverable oil and gas. BOEM and the federal Bureau of Safety and Environmental Enforcement (BSEE) proposed the new rules.
The requirements for operators would include: having the capability to predict, track, report and respond to ice conditions and bad weather; the ability to properly manage contractors; being able to use source control and containment equipment while drilling below the surface casing; and having access to a separate relief rig in case of a subsea blowout.
The relief rig requirement is the most controversial of the proposed rules. It can be a working rig, it can be idle offshore or it can be in a harbor, but the relief rig must plug an uncontrolled well within 45 days of an incident, according to the proposed rules.
Some industry experts believe this regulation is unnecessary and will discourage investment. “The measure you take to address a well control incident follows a hierarchy that is integrated into the entire well plan,” said Richard Ranger, senior policy adviser for the American Petroleum Institute. “That’s how you control a well — not by bringing in a rig from somewhere else.”
“Given the major costs for these projects, (a relief rig) would be a requirement that would discourage a lot of drilling,” he said.
Ranger said there are other methods, such as a subsea capping stack, that can provide the same additional measure of protection as a relief rig. A well’s design includes equipment like blowout preventers and “kill” fluids such as mud.
“We are not disagreeing with the context, what we are saying is the remedy should not be fully predicted on having a relief rig,” he said.
In the event of an incident, it is crucial that a relief well is drilled before the onset of ice at the end of the drilling season, according to Nicholas Pardi, BSEE spokesman. “A relief rig is the only reliable method currently available to kill an out-of-control well. As such, this is a critically important requirement.”
However, operators do have another option. “If an operator develops an alternative that offers equal or greater protection to personnel and the environment, this rule (and current BSEE regulations) allows for approval of the alternative,” Pardi said.
As part of its review of the new regulations, the American Petroleum Institute is “closely examining the government’s standards for allowing ‘alternative compliance measures,’” said spokesman Brian A. Straessle.
When asked whether these rules would discourage exploratory drilling, Pardi said they are needed. “The Arctic (Outer Continental Shelf) has the potential to provide vast energy resources to the nation, but there are unique challenges to drilling in the Arctic that must be addressed.”
“The Arctic presents a unique and demanding environment, including weather, climate, geography and the subsistence needs of Alaska Native communities,” he said.
Issues raised in the Department of the Interior’s 2013 review of Shell Oil’s 2012 drilling operations in the Beaufort Sea and Chukchi Sea were also addressed in the proposed rules, according to Pardi.
Shell Oil experienced major problems with its 2012 Arctic drilling program, according to the 2013 review. Some of the problems were due to shortcomings in Shell’s management of key contractors.
The company’s drilling operations received a boost in late March when the Interior Department affirmed the 2008 Chukchi Sea gas and oil lease sale to Shell. A 2014 federal court decision had suspended the lease. However, Shell’s 2015 drilling operations still need to be approved by the Bureau of Ocean and Energy Management.
