NOIA boss: New Arctic drilling rule could thwart innovation

Following the U.S. Interior Department’s launch of the final rule on the oil and gas drilling in the U.S. Arctic, the National Ocean Industries Association (NOIA), a U.S. body representing offshore energy industry, has issued a response, saying that the rule, as is, might be counterproductive.

DOI’s final rule requires operators to have access to – and the ability to promptly deploy – source control and containment equipment, such as capping stacks and containment domes, while drilling below or working below the surface casing.

Additionally, among other things, operators also must have access to a separate relief rig able to drill a timely relief well under the conditions expected at the site in the event of a loss of well control;

NOIA president Randall Luthi said: “Despite taking years to write, the rule does not accurately reflect current industry capabilities and includes unnecessary requirements, such as same season relief wells, which may not be needed due to the availability of new response and containment equipment. Prescriptive requirements in the rule could thwart industry innovation and development of new technology, and may not actually increase operational safety.”

Luthi’s statement on the impact on innovation is similar to the one of American Petroleum Institute’s Upstream and Industry Operations Director Erik Milito who said the rule was an unfortunate turn by the administration and “will continue to stifle offshore oil and natural gas production.”

He said API remains concerned about various regulatory activities related to offshore energy development including proposals for Arctic operations.

NOIA’s Luthi further 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. We look forward to working with the Bureau of Safety and Environmental Enforcement to see that this rule is implemented in a manner that will enhance Arctic safety and foster a robust Arctic energy leasing program.”

Environmentalists pleased

The Wilderness Society, a U.S. conservation organization, described the new rule as technically reasonable, and essential to protecting the Arctic.

The society’s Ocean’s Arctic Program Director Lois Epstein, an Alaska-licensed engineer, said: “The Arctic Ocean is an extremely challenging operating environment with large masses of moving ice, dangerous storms, winter darkness and a lack of shore-based infrastructure that would be needed to respond to spills,”

He said drilling in the Arctic Ocean is far riskier than in the Gulf of Mexico, which is why BSEE recognized the need for these new requirements. Epstein added that the Arctic Ocean is a vital, near-pristine habitat for polar bears, whales, seals and fish, and provides important subsistence resources for Alaska Native communities, Epstein added.

Epstein said: “If exploratory drilling is to occur, it must be done with the best technologies and procedures to prevent blowouts and spills that would be impossible to clean up completely. These Arctic-specific exploratory drilling requirements are technically reasonable, not overly costly, and essential to protect the Arctic Ocean from the devastating effects of a major spill.”

To remind, the Interior acknowledged there had been Arctic lease relinquishments. To remind, Shell in September last year said it would not be returning to drilling in the Alaskan waters for the forseeable future, citing in part, the challenging and unpredictable federal regulatory environment in offshore Alaska.

The Interior Department, however, on Thursday said that despite some operators pulling out, others continue to hold a number of leases in the Beaufort Sea Planning Area and one in the Chukchi Sea Planning Area.

“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 Interior Department said.

Offshore Energy Today Staff