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Interior official hears wide range of views on oil drilling in Arctic

Lisa Demer

Against the backdrop of Royal Dutch Shell's troubled 2012 attempt to drill in the Arctic Ocean, a top Interior official -- and former Alaskan -- heard the gamut of views Thursday about whether and how oil companies can safely drill offshore in the Alaska Arctic.

No drilling at all, said the Sierra Club.

Clear and consistent standards, said the oil companies and industry groups.

The Department of the Interior for the first time is crafting specific rules for oil and gas exploration and production offshore in the Arctic. While Shell was operating under special conditions, such as a ban on drilling into oil-rich zones without a spill containment system, those requirements don't automatically extend to other oil companies.

Tommy Beaudreau, director of the Bureau of Ocean Energy Management and the department's acting assistant secretary over land and minerals management, earlier this year led a critical review of Shell's 2012 drilling season about which then-Interior Secretary Ken Salazar concluded, "Shell screwed up."

"Our report says going forward we should have in the regulations additional Alaska-specific standards for operations offshore in this state," Beaudreau told 50-plus people gathered in the Assembly chambers at Loussac Library for a listening session intended to help the department craft new rules.

Beaudreau told the audience he still felt a connection to Alaska, where his family moved in 1979. He remembers when Loussac was built and wondered if it had more books now. For a time, his father worked on the North Slope, two weeks on, two weeks off. Beaudreau was a junior at Service High School during the Exxon Valdez oil spill.

"That made, obviously, a huge personal impression on me," Beaudreau said. "So I also understand that perspective of things -- problems, the disruption, the harm that can be caused when oil and gas activity goes wrong." A lawyer, he landed at the Department of the Interior in 2010, two months after BP's deadly Deepwater Horizon blowout in the Gulf of Mexico.

Now he's overseeing the rules to ensure safe drilling here.

Beaudreau and other federal officials heard Thursday from Shell, which has canceled plans for drilling this year, and ConocoPhillips, which has put off its Arctic offshore drilling because of uncertainty over standards. Environmentalists, representatives of the North Slope Borough and the Northwest Arctic Borough and concerned individuals spoke up too.

Some highlights:

• Shell's Lucas Frances said the company has long advocated for "clear, predictable, consistently applied rules." Shell, the biggest leaseholder offshore Alaska, supports high standards, but the federal government also needs to allow room for innovation and not tell operators how to solve all the issues, he said. Companies shouldn't be instructed to be good neighbors -- that's essential and will happen anyway, he said.

Shell, one of the biggest oil producers in the world, last year experienced a grounded oil rig, another rig that dragged anchor, equipment issues on both rigs, and engine failures on a tow ship -- and that's without tapping into oil-producing rock.

• Mike Faust of ConocoPhillips said the company expects clear and reliable standards that won't change during exploration and development. And like Shell's Frances, Faust said the federal government should craft "performance standards" but not prescribe particular technology or equipment.

• Lois Epstein, Arctic program director for The Wilderness Society, said Shell's troubles illustrate the challenge of Arctic drilling. The new rules need to go beyond the requirements put on Shell, she said. Among the dozen items on her list are polar class oil rigs, Arctic-engineered pipelines, standby rigs to drill relief wells in case of a blowout, well-capping and containment systems, and zero discharge of drilling mud and other waste at sea.

• Daniel Lum of Fairbanks, who grew up in Barrow, told Beaudreau that his agency isn't giving the public enough time to comment on oil company permits before they are issued. When permits limiting air pollution from rigs were under the federal Environmental Protection Agency, for example, groups could challenge them through an administrative appeals process. But after Sen. Lisa Murkowski pushed to streamline the process and move air permit approvals to the Bureau of Ocean Energy Management, that opportunity vanished, he said.

"You are giving us no time frame, no opportunity for administrative appeal. Basically, you are taping our mouth shut," Lum said.

• Kenny Gallahorn, an official with the Northwest Arctic Borough, questioned why the borough was excluded from the formal community consultation process. Even though his region doesn't border the drilling areas, marine mammals hunted by borough residents cross borough lines, he said. Beaudreau said later the community may need to be directly brought into the process.

• Rick Rogers, executive director of the Resource Development Council, noted that years ago 30 wells were drilled in the Beaufort Sea and five in the Chukchi Sea "without incident." Technology has only improved since then, he said.

• But Tom Lohman, environmental resource specialist for the North Slope Borough, noted that some whaling communities failed to get a whale during that earlier drilling. Last year for Shell, regulators banned drilling during whaling season.

The industry's call for performance standards doesn't make sense, Lohman said, when companies haven't demonstrated an ability to clean up an oil spill in the Arctic.

Beaudreau is holding two additional listening sessions Friday in Barrow. His team will go over the comments in detail, he said.

"I think what we heard here today from across the spectrum, and we did get the entire spectrum today, was a lot of passion and a lot of sincere belief and strong feeling across the board."

Reach Lisa Demer at ldemer@adn.com.


By LISA DEMER
ldemer@adn.com
Contact Lisa Demer at LDemer@adn.com or on

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