Obama toughens Arctic drilling rules

Obama toughens Arctic drilling rules
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The Obama administration rolled out a suite of new regulatory standards Thursday to strengthen offshore oil and natural gas safety in the unique, unforgiving Arctic Ocean.

It’s the first time that the federal government has put forth specific safety rules for the Arctic, which is vastly different from more developed offshore drilling areas such as the Gulf of Mexico.

The regulation from the Interior Department is meant in part to allay fears from environmentalists, Alaskan Native American tribes and others who believe drilling in the United States’s portion of the Arctic, off Alaska’s northern shore, is inherently risky, with a high chance of catastrophe.

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The standards, proposed last year, come despite the fact that no company is using offshore rigs to drill in Arctic federal waters, no company has any imminent plans to drill, and numerous companies have abandoned their drilling rights leases. President Obama is considering prohibiting new drilling rights auctions through 2022.

“The regulations we are issuing today support the Administration’s thoughtful and balanced approach to any oil and gas exploration in the Arctic region,” Janice Schneider, Interior’s assistant secretary for land and minerals management told reporters Thursday.

“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,” she said.

Under the new rules, drillers will have to park backup drilling rigs nearby that are ready to drill a relief well in case of a well blowout, to prevent what happened in the 2010 Deepwater Horizon disaster.

Companies will need to have drilling and spill response plans that take into account specific Arctic conditions, be equipped to contain spills without using chemical dispersants, and be banned from drilling during icy seasons.

The standards apply only to exploratory drilling. Drilling for oil or gas production would be years away if a company found profitable deposits.

Interior estimated that the rules would cost up to $2.05 billion for compliance, but it did not estimate the monetary benefit of them.

"We do believe that the benefits here far outweigh the costs," Schneider said, pointing to the significant costs of major oil spills, and the likelihood that the rule would reduce the chances and severity of a future spill.

Royal Dutch Shell is the only company to have recently tried drilling, in the summers of 2012 and 2015, but it did not find deposits worth additional exploration.

Interior said its regulation incorporates lessons learned from Shell, including its error-ridden 2012 season that ended with its drilling rig running aground on an Alaskan island.

The oil industry immediately slammed the new rule, saying it is unnecessary, costly and would significantly hurt the industry.

“This is an unfortunate turn by this administration and will continue to stifle offshore oil and natural gas production,” Erik Milito, upstream director for the American Petroleum Institute, said in a statement. “We remain concerned about various regulatory activities related to offshore energy development including today’s proposals for Arctic operations."

Republicans have largely agreed with the industry in the time since the rule was proposed last year, and the GOP has sought to blunt or stop the regulation.

Some environmentalists were glad to see the new regulation, but said it doesn't go far enough in their goal to completely stop Arctic drilling.

"The rules announced today are both necessary and long overdue," said Michael LeVine, Pacific senior counsel at Oceana. "They do not, however, ensure safe and responsible operations or address all of the deficiencies in government decisions about offshore oil and gas activities in the Arctic Ocean."

"Where we drill, we spill," said Neil Lawrence, Alaska director at the Natural Resources Defense Council. "The Arctic is harsh, fragile, remote, and pristine. We can’t contain or clean up the oil from a blowout in these waters. And we can’t protect them from the devastation that would bring. That’s why no regulations will make Arctic drilling safe."

This story was updated at 4:42 p.m.