Arctic Drilling Regs Require Relief Rig; Shell Sees ‘Critical’ Flexibility

The Department of Interior today released proposed new Arctic-specific drilling standards for offshore oil exploration. They would require an Arctic operator to have a well cap at hand, but more controversially, a rig on standby that can drill a relief well within 45 days if there’s a blowout.

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The idea for drilling standards suitable for harsh Arctic conditions was spurred by Shell’s calamitous 2012 season, which featured multiple equipment failures and a floating rig run aground. Brian Salerno, director of the Interior Department’s Bureau of Safety and Environmental Enforcement, says the standards are similar to the permit conditions imposed on Shell during that season, with some additions.

“There’s a lot of commonality with what is proposed in this rule with what was done by Shell, and what is currently being discussed with Shell,” he said.

Shell is the only company now planning to drill on the outer continental shelf off Alaska, and it hopes to return to the Arctic this summer. The new rules would apply to future exploratory drilling in the Chukchi and Beaufort seas. They won’t be final in time for this summer’s drilling season, but Salerno says many of the features will be part of Shell’s permit conditions this year.

Shell spokeswoman Megan Baldino says the company supports regulations that promote safety, as long as they’re clear and well reasoned.

“Regarding the relief rig requirement, DOI is clear the use of equivalent compliance measures may be approved, and we think that flexibility is really critical,” she said. “It’s going to encourage the development of new innovative technology for Arctic operations that are both economic and environmentally sound. That’s really important.”

Shell has said that having a relief rig on standby would cost $250 million a year.

The requirement to have a relief well drilled within 45 days after an incident would allow the company to park a rig in Dutch Harbor, an estimated 20 days away from Shell’s farther lease areas. Or, the rules would allow what Shell has proposed for the Chukchi this year: Two working rigs, each serving as the standby for the other.

The rules also say a company may be able to avoid having a relief rig at all, if it can show that other technology provides the same protection.

Marilyn Heiman, who works on Arctic Ocean protection for the Pew Charitable Trusts, says she likes the proposed standards, especially the time limits.

“The big differences are the requirement to have a capping stack in place within 24 hours, a requirement to have a containment system within seven days and the requirement to have a relief rig readily available to drill a relief well,” said Heiman, who was the Alaska policy advisor in President Clinton’s Interior Department. (By “readily available” she means near enough to have a relief well in 45 days, rather than a delay that could be nearly a year-long, due to ice.)

The rules don’t set end dates for drilling, but they say it has to stop before seasonal ice returns, and they require the operators to conduct ice tracking and forecasting to predict when that will be.

Heiman says the 2010 Gulf spill proved a relief drilling rig is indispensible.

“Because if the capping stack doesn’t work, or if the containment system doesn’t work, we know in the Deep Water Horizon, they needed a relief well to actually control the blowout. So, I think that’s a critical piece of this,” she said.

Other environmental groups, including the Sierra Club and Oceana, praise the draft rules but say Arctic drilling remains too risky. Sen. Lisa Murkowski says she’s reserving judgment until it’s clear the rules won’t deter investment.