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New safety rules for offshore Arctic drilling proposed to avoid repeat of Shell disaster

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New safety rules for offshore Arctic drilling proposed to avoid repeat of Shell disaster

US officials want to make sure companies can handle a blow-out in remote and icy conditions – without inflicting an environmental disaster

Suzanne Goldenberg in Washington

Screen Shot 2014-10-28 at 11.51.59The Obama administration proposed new rules for Arctic oil drilling on Friday in an attempt to avoid repeating Shell’s disastrous foray into extreme waters. The proposals, shaped by the 2010 BP oil spill in the Gulf of Mexico, and the grounding of Shell’s drill ship in the Arctic two years later, are aimed at making sure companies could handle a blow-out in remote and icy conditions – without inflicting an environmental disaster on the pristine seas.

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Feds propose stricter requirements on Arctic oil exploration

By Dina Cappiello – Associated Press – Friday, February 20, 2015

WASHINGTON (AP) — Companies seeking to hunt for oil in the frigid, ice-filled waters off Alaska may soon be subjected to stricter rules.

The Obama administration on Friday proposed new rules for exploratory drilling, the first step in producing oil. The rules are the first tailor-made for drilling in the Arctic.

The new rules will not apply to Shell Oil’s plans to complete two wells off Alaska this year. But officials said the company’s preparations served as a model for the proposal.

The rules would require companies to be able to drill a relief well to contain an uncontrolled spill before ice sets in, shutting down the drilling season.

In 2012, Shell’s drilling rig dodged an ice floe. A drill ship nearly ran aground.

Environmentalists have long argued Arctic drilling is too risky.

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Obama Administration Clears A Plan To Overhaul Oil And Gas Rules For Arctic Drilling

By Maria Gallucci @mariagallucci [email protected] on February 20 2015 12:12 PM EST

The proposal would, for the first time, establish offshore drilling standards for the Chukchi and Beaufort Seas near Alaska, an area thought to be rich in fossil fuels but that also encompasses a delicate environmental balance.

The Office of Management and Budget, which helps oversee federal regulatory policies, said Friday it had approved the Arctic drilling rules, The Hill first reported. The proposal is expected to be released to the public within days.

The Obama administration began the overhaul effort largely in response to a 2012 drilling debacle by Royal Dutch Shell PLC. The company had paid $2.1 billion in 2008 to lease swaths of the Chukchi Sea, but its exploratory drilling efforts hit major regulatory and environmental snags. Then, two years ago, Shell’s drill ship pulled its anchor and nearly ran aground of an Aleutian Islands port near Alaska. Workers also damaged a new containment dome as they tested a spill response barge off the coast of Washington state. Shell has since halted exploratory drilling in the area.

The U.S. Department of the Interior last month proposed to offer new leases for Arctic oil and gas drilling. The agency’s five-year plan includes one lease sale each for three assigned areas in offshore Alaska, though it does restrict drilling in the Arctic National Wildlife Refuge, taking 9.8 million acres of Arctic waters off the market. The January proposal also includes 10 lease sales in the Gulf of Mexico and one lease in the combined mid-Atlantic and south Atlantic zones.

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Shell, ConocoPhillips and other oil companies lobbied against the Arctic drilling rules, arguing that the measures would do little to protect the environment but cost companies billions of dollars, The Hill noted.

Environmental groups are opposed to offshore drilling of any kind, but especially in the Arctic, where they say fragile ecosystems and populations would be severely affected by an oil spill or rig disaster. “Arctic drilling could easily destroy the world’s last pristine ocean,” Peter Lehner, executive director of the Natural Resources Defense Council, said in a recent post.

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Bloomberg:Arctic Oil Drillers Face Tighter U.S. Rules to Stop Spills

by Mark Drajem: 20 Feb 2015

(Bloomberg) — Royal Dutch Shell Plc and any oil drilling company that prospects in the Arctic Ocean must boost safety practices to prevent spills in the frigid and often hostile waters or mitigate the impact, U.S. regulators proposed Friday.

The Interior Department’s first Arctic-specific drilling rules respond to mishaps that plagued Shell’s efforts three years ago, by shortening the drilling season and requiring companies to have a backup rig nearby. Shell had already agreed to do much of what’s in the proposal as part of its 2012 exploration plan, which was suspended after the stumbles.“Until now these requirements were applied as part of Shell’s exploration plan,” Abigail Ross Hopper, director of the Bureau of Ocean and Energy Management, said Friday during a conference call with reporters. “The proposed regulation takes those requirements and codifies them.”

The plan from Interior marks the latest in a series of measures from President Barack Obama’s administration to regulate offshore or Alaskan oil production.

Obama declared Alaska’s Bristol Bay and the Arctic National Wildlife Refuge as off limits for oil drilling last month, and issued an offshore drilling plan that reduced areas for exploration in the Arctic.

Those plans were denounced by oil industry lobbyists and Republican lawmakers from Alaska. Still, Shell neither complained nor praised the proposed rule.

‘Clear, Consistent’

“Of paramount concern in all of our operations is safety and environmental protection,” Curtis Smith, a Shell spokesman, said in an e-mail. “We support regulations that further these imperatives in the Arctic, provided they are clear, consistent and well-reasoned.”

Shell has said it wants to resume exploration when the weather gets warmer this year after halting operations in 2012 when a drilling rig ran aground and it was fined for air pollution. Environmental groups, citing harsh conditions and a fragile ecosystem, say it’s a mistake to drill in the region.

“The new rules clearly are needed and are an improvement, but they do not ensure safe and responsible operations in the Arctic Ocean,” said Susan Murray, deputy vice president of Washington-based Oceana. “There is no proven way to respond to a spill in icy Arctic waters.”

Oil exploration and production companies in the past decade stepped up plans to drill in the Arctic, using technology that may let them reach reserves trapped in the sea floor beneath ice. The Chukchi and Beaufort Seas may contain 24 billion barrels of oil, according to the U.S. Geological Survey.

Shell’s Requirements

The Interior Department said the proposal builds on the requirements Shell has accepted. The rules require companies to use equipment designed specifically to perform in the extreme cold and high seas; have a relief rig and containment dome ready and nearby; and halt drilling 45 days before the short season ends to provide enough time to drill a relief well, if needed.

Operators can request approval of alternatives to a relief rig “if they can demonstrate provides same or better level of protection,” the Interior rule said.

The proposal is subject to 60 days of public comment.

When it visited the White House to lobby on this rule last year, Shell argued that requiring a second rig and cutting short oil production would cost billions of dollars with little or no safety benefit.

Shell’s Wells

“We have and will continue to take unprecedented steps to ensure we can operate safely and responsibly in the Arctic,” Smith said in an e-mail.

Shell, the only company with current plans to explore off the Alaska coast, drilled two preparatory wells after spending about $6 billion over almost a decade in preparation. While the drilling itself had few glitches, Shell had difficulty deploying and then moving out its drilling rigs, Interior said in its proposal.

Shell’s conical drilling barge, the Kulluk, was damaged when it ran aground in southern Alaska Dec. 31, 2012, while being towed during a storm. The Noble Discoverer drill ship was temporarily detained by the U.S. Coast Guard a month earlier after it lost propulsion while docking at Seward, Alaska.

In 2013, the Environmental Protection Agency said that Shell’s operation of the Kulluk violated “numerous conditions in the permit” under the Clean Air Act.

To contact the reporter on this story: Mark Drajem in Washington at [email protected]

To contact the editors responsible for this story: Jon Morgan at [email protected] Steve Geimann, Elizabeth Wasserman

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