This story has been updated.
The Obama administration on Thursday finalized rules that will require companies to have strict safety and environmental protection plans in place before they drill for oil or natural gas in the Arctic Ocean.
The new regulations do not expressly prohibit drilling in the Arctic, but they require companies to submit detailed plans for how they will drill safely and respond to oil spills and other emergencies. In part because of an extended slump in global oil prices, and also because of major setbacks to prospects for drilling in the Arctic, the industry has largely steered clear of plans to drill in the area recently.
But that doesn’t mean companies won’t seek to drill there in the future. Thursday’s rules specifically cover drilling in the Chukchi and Beaufort Seas, to the northwest and north of Alaska, respectively.
Among other measures, they require companies to have oil spill response plans, ice and weather forecasting capabilities, and to have a relief rig on hand to drill a relief well in the event of well problems.
“The unique Arctic environment raises substantial operational challenges,” said Abigail Ross Hopper, director of the Bureau of Ocean Energy Management (BOEM), in a statement accompanying the release of the new rules. “These new regulations are carefully tailored to ensure that any future exploration activities will be conducted in a way that respects and protects this incredible ecosystem and the Alaska Native subsistence activities that depend on its preservation.”
The real question, however, is which companies will now want to operate under these regulations.
Royal Dutch Shell had already suspended its plans for drilling in the fragile Arctic region late last year after an unsuccessful attempt at one exploratory well in the Chukchi Sea, citing costs as well as a “challenging and unpredictable federal regulatory environment.” Shortly afterwards, so did the Norwegian oil giant Statoil, at least for the Alaskan Arctic.
The Obama administration also canceled two Arctic drilling lease sales last year, citing a lack of industry interest.
Royal Dutch Shell’s U.S. media manager, Curtis Smith, said Thursday the company is “reviewing the final Arctic regulations,” but added that “it’s worth noting we still have no plans to conduct exploration activities offshore Alaska for the foreseeable future.”
Still, some analysts have suggested that these moves were as much a response to low oil prices as to an aversion to regulation or the challenges of Arctic operations — and that in a future of higher oil prices, companies may line up to exploit Arctic resources again.
No wonder, then, that some environmentalists praised the move Thursday even as industry groups faulted it.
Michael LeVine, Pacific senior counsel for the conservation advocacy group Oceana, said the rules finalized Thursday involve “common-sense precautions” aimed at preventing devastating oil spills such as the 2010 Deepwater Horizon disaster in the Gulf of Mexico.
“The new rules should help lead to better choices by the government and companies in the future,” LeVine said in a statement, calling the regulations both necessary and long overdue. “Until and unless companies can operate safely and without harming the health of Arctic Ocean ecosystems, the government has no business selling leases or authorizing exploration in the region.”
However, the Natural Resources Defense Council took a different tack. “Where we drill, we spill,” Niel Lawrence, Alaska director for the council, said in a statement Thursday. “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.”
Lawrence argued that while the new regulations are better than what has come before, President Obama should use his authority to cease any future drilling in the Arctic.
“This is an unfortunate turn by this administration and will continue to stifle offshore oil and natural gas production,” Eric Milito, upstream and industry operations director for the American Petroleum Institute, said in a statement Thursday. “We remain concerned about various regulatory activities related to offshore energy development including today’s proposals for Arctic operations.”
The group has maintained that the U.S. oil and gas industry has a track record of working with the government to improve the safety of offshore drilling and that proposed new regulations only hinder innovative advancements in the industry, without actually making the practice safer. The industry has argued that rather than place onerous requirements on drilling in the Arctic, regulations need to be flexible enough to take into account new technologies and balance safety and environmental concerns with potential economic benefits and the interests of local communities.
“America’s energy resurgence is a once-in-a-generation opportunity that has put this country on a path toward economic growth, consumer benefits, environmental progress and a more secure energy future,” Milito said. “This administration has already fallen short of creating opportunities for new jobs, while also erasing millions in revenue to the government. Expanding offshore development is integral to the safe and responsible path for securing the domestic energy supplies future generations of Americans demand.”
Darryl Fears contributed to this report.