Read RDC's Comments

Comment deadline is May 27, 2015

Overview:
The Bureau of Ocean Energy Management (BOEM) and Bureau of Safety and Environmental Enforcement (BSEE) have released draft Arctic-specific regulations pertaining to oil and gas exploration and development in the Alaska Outer Continental Shelf (OCS). The Alaska OCS has the potential to be an essential and integral part of the nation’s “all of the above” domestic energy strategy. The proposed Arctic-specific regulations focus solely on the OCS within the Beaufort and Chukchi seas.

In a report requested by the Secretary of Energy of its long-standing advisory council, the National Petroleum Council recently concluded that offshore exploration in Alaska must begin now to help offset a projected sharp decline in domestic oil production in the next decade and beyond. It further found that an efficient regulatory framework is a key factor in economically viable Arctic development. Left unchanged, the proposed regulations may inhibit the ability to develop critical Arctic resources and even increase risks to safety and the environment.

Action requested:
This comment period, and upcoming BOEM decisions on Shell's plans to explore its Chukchi leases this year, will play a crucial role in the feasibility and fate of Arctic exploration, and your voice is needed in support of reasonable regulations and decisions. RDC members are encouraged to submit comments on the proposed regulations by April 27, 2015.

Comments may be submitted online: http://www.regulations.gov
In the search tab on the main page, enter BSEE-2013-0011, select the document, then “Submit a Comment.”

By Mail, reference “Oil and Gas and Sulphur Operations on the Outer Continental Shelf-Requirements for Exploratory Drilling on the Arctic Outer Continental Shelf (1082-AA00).”

Attention: Regulations and Standards Branch
381 Elden Street, HE3314
Herndon, VA 20170-4817

Points to consider for your comments:

• The draft regulations should be revised, taking into account the National Petroleum Council’s Arctic report. While some provisions in the draft regulations are aligned with the NPC study, others would benefit from the research and recommendations in the study.
• It is important that the new Arctic-specific regulations are clear and well-reasoned. Unfortunately, the draft regulations fall short and many of the requirements are disconnected from knowledge and research.
• The Draft Arctic Regulations are not justifiable from a cost-benefit perspective. BOEM and BSEE have applied assumptions that understate the cost of certain requirements and have overstated the benefits of the proposed regulatory package. The benefits of the proposed regulation are calculated based on the assumption that a catastrophic oil spill will occur in the U.S. Arctic OCS in the next ten years. However, this assumption is at odds with the broadly acknowledged fact—a fact even acknowledged in the draft regulations—that the probability of such an event is extremely low.
• The Draft Arctic Regulations do not define a workable process pursuant to which an operator can apply to use equivalent technology to a Same Season Relief Rig (SSRR). The lack of a defined process for the approval of equivalent technology will prevent operators from being able to adapt their programs as new technologies become available. This stifles innovation in a field that is uniquely equipped to engineer improved solutions to the technical challenges associated with Arctic exploration.
• The Draft Arctic Regulations will significantly complicate the permitting environment for the U.S. Arctic OCS by imposing redundant and potentially conflicting regulatory requirements on operators. For example, the Draft Arctic Regulations include the potential for discharge restrictions, which intrude on the jurisdiction of EPA and increase regulatory uncertainty for operators without providing additional benefits to the environment.
• The Integrated Operations Plan (IOP) requirement set forth in the Draft Arctic Regulations is redundant with existing requirements for Exploration Plans (EP). Additionally, the requirement that an IOP be submitted 90 days in advance of EP submission appears to be a regulatory end-run around the OCSLA requirements relating to the time-frame for EP approval.
• The Draft Arctic Regulations include a requirement for a Blow-Out Preventer (BOP) pressure test every seven days, which is not justifiable from a risk-based perspective as it unnecessarily increases the wear-and-tear on assets. Current BSEE regulations require a BOP test every 14 days.
• The Draft Arctic Regulations establish an early end of season date for drilling activities well in advance of the average onset of ice pack – cutting an already short operating season in the Arctic even shorter. Despite this move to limit season length in the Arctic OCS, the Draft Arctic Regulations do not provide any corresponding relief on the issue of lease terms.
• In its recent report, the National Petroleum Council said the U.S. should immediately begin oil and gas exploration and development in the U.S. Arctic or risk a renewed heavy reliance on imported oil in the future. In order for the U.S. to keep domestic production high and imports low, oil companies should start probing the Arctic now because it takes 10 to 30 years of preparation and drilling to bring oil to market. The Department of Energy has warned that oil production from shale deposits in the Lower 48 will sharply decline in the next decade.
• The development of the U.S. Arctic OCS has the potential to be a significant contributor to our nation’s energy security, as well as a significant source of long-term jobs for Americans. It is estimated that economic activity from the development of Arctic energy resources would create an annual average of 54,700 jobs nationwide with a cumulative payroll of $154 billion over the next 50 years.
• The federal government estimates there are 23.6 billion barrels of recoverable oil and 104.4 trillion cubic feet of natural gas in the Chukchi and Beaufort seas planning areas. America’s offshore Arctic oil and gas deposits could be among the largest in the world.

Comment deadline is May 27, 2015