Senior Republican presses Interior for ‘certainty’ on Arctic drilling

Sen. Lisa Murkowski (R-Alaska) is putting public pressure on the Interior Department to move ahead with planned regulations that will govern drilling in Arctic waters off Alaska’s northern coast.

“It is important that we have those regulations that are clearly defined in advance — well in advance, hopefully — of the [drilling] season, so that level of certainty moving forward is there,” Murkowski told top Interior Department officials at an Appropriations Committee hearing Tuesday.

Murkowski is the top Republican on the Senate Energy and Natural Resources Committee, as well as the Appropriations subcommittee that oversees Interior’s budget.

The Interior Department is crafting “Arctic-specific” rules that will address topics such as spill containment readiness and other areas. Deputy Interior Secretary David Hayes said Tuesday that the department intends to float draft regulations by the end of the year “so that there will be clarity moving forward.”

The regulations are part of an effort by policymakers and companies to chart a path forward on how the industry will operate in harsh Arctic seas thought to contain large amounts of oil.

ADVERTISEMENT
Royal Dutch Shell suffered a series of mishaps last year in its efforts to begin looking for oil in federal waters off Alaska’s coast. The oil giant has announced it won’t try again until the 2014 drilling season at the earliest.

Hayes told reporters that Shell could proceed in 2014 even if the rules are not yet complete when the drilling window opens in the summer. He noted regulators have already demanded various safety requirements in Shell’s exploration plans, such as subsea spill containment equipment.

Interior officials are requiring Shell to take additional steps to improve planning in the wake of last summer’s mishaps, as well.

“So we have the ability to continue to operate that way, and then leverage that into regulations that apply to all operators,” Hayes said of the requirements Shell faces. “In either case, we are able to proceed as long as the companies commit to meet the requirements that we lay out, either in the operating plan or under the regulations.”

Other companies are on a slower track than Shell when it comes to U.S. Arctic drilling.

In April, ConocoPhillips scuttled plans to try and drill exploratory wells off Alaska’s coast in 2014, blaming “the uncertainties of evolving federal regulatory requirements.”

Norwegian oil giant Statoil plans to hold off until at least 2015 as well.

Sen. Mark Begich (D-Alaska), who like Murkowski supports Arctic drilling, said he does not believe Interior's Arctic-specific regulations need to be complete for Shell to proceed, noting, like Hayes, that they’ve already agreed to various conditions in their exploration plans.

But he said the rules will be important in enabling other companies to move ahead.

“In the future, with Conoco[Phillips] and Statoil, we need to get these regulations done so there is clear certainty in what they need to plan for. That is what we hear from both those companies: Just tell us what the rules are, and then we will go from there, but if we don’t know what they are, then we can’t plan,” Begich said in the Capitol Tuesday.

“So for Shell, which is kind of its own case, it’s one story, for Conoco[Phillips] and Stat[oil] and any others, we have got to get this done, and end of the year would the latest,” he said of the planned draft regulations.

New Interior Secretary Sally Jewell said at Tuesday’s hearing that she has met with Shell and ConocoPhillips.

“I don’t believe, in my conversations, that either Shell or ConocoPhillips feel that it is regulations getting in their way. It is ensuring the technology is available to be able to respond in the event of a spill incident up there that is of paramount importance to us, and I am sure to you as well — we certainly don’t want a situation in the Arctic like we experienced in the Gulf,” Jewell told Murkowski at Tuesday’s hearing, a reference to the 2010 BP spill in the Gulf of Mexico.

Last year, Shell “didn’t pass the tests,” Jewell noted.

The company began operations off Alaska’s coast last year but faced several woes, including damage during testing to a key piece of equipment that is needed to contain a potential subsea blowout.

Ultimately, Shell did not win Interior Department permission to drill into oil-bearing zones, but was allowed to begin preliminary, so-called top-hole drilling.

The company in February announced it was “pausing” and would not seek to drill in the Arctic seas off Alaska's coast in 2013.