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Release of Interior's Arctic standards for offshore oil development delayed

Yereth Rosen
Royal Dutch Shell's Kulluk drillship in the Beaufort Sea in fall 2012. Royal Dutch Shell photo

Arctic-specific standards to guide offshore oil operations -- rules crafted in response to Shell’s trouble-plagued 2012 drilling season -- will be issued later than expected, the head of a key federal agency said on Wednesday.

A draft version of the new standards, initially expected by the end of the year, is now expected in early 2014, said Tommy Beaudreau, director of the Bureau of Ocean Energy Management and acting assistant Interior secretary for lands and minerals.

Beaudreau, in a brief interview at the annual Resource Development Council for Alaska's annual conference in Anchorage, said the October government shutdown stalled some of the progress.

“We set a pretty ambitious and aggressive timetable to try to get this completed by the end of the year. We’re actually on a very good path with that,” he said. But the shutdown cost critical work days and set back the timetable, he said. “We expect to have proposed rules out in the first quarter of 2014,” he said.

The project to establish Arctic-specific standards for all operators in the Chukchi and Beaufort seas came out of a Department of Interior report, led by Beaudreau, evaluating Shell’s performance in 2012.

Shell’s difficult season was capped by the costly grounding of the Kulluk, a drill ship the company was towing through the Gulf of Alaska on a journey to Seattle for winter upgrades. Now the Kulluk is out of service and might not be worthwhile to repair, Shell has said. The company faced numerous other troubles in 2012, including failure to secure a required oil-spill barge in time for drilling, air-quality violations, a near-grounding off Unalaska of a second drill ship, the Noble Discoverer, and difficulties with drifting sea ice in the Chukchi. The year’s problems were enough to cause Shell to postpone drilling through 2013; the company has just now submitted to BOEM a plan to resume exploration drilling in 2014.

Beaudreau told the RDC audience that despite the troubles that bedeviled Shell in 2012 and despite the known difficulties of operating in such a remote, harsh and expensive area, the offshore Arctic remains an attractive place to explore for oil.

With more than 15 billion recoverable barrels of oil believed to lie beneath it, the Chukchi is second only to the central Gulf of Mexico in undiscovered reserves, he said.

The Chukchi, with its potentially larger oil riches, has other characteristics that could make it more attractive to industry than the Beaufort, Beaudreau said in the interview. While federal waters of the Beaufort are closer to existing North Slope oil-field infrastructure, the Chukchi is closer by sea route to major supply and service ports, he said. And while the Chukchi is full of dangerous sea ice and other hazards, the leases there pose fewer conflicts with subsistence hunts because they are not as close as the Beaufort leases to whale migrations, he said.

Beaudreau told the RDC audience that there is yet another important reason for the U.S. government to promote offshore Arctic oil development -- to set a high standard at a time when Arctic areas in other nations are being drilled.

“America is an Arctic nation and must be a leader among Arctic nations,” he said. “We have the opportunity and, I believe, the responsibility to establish a global model for standards, best practices and oversight that Arctic nations around the world should look to us and emulate. That is, I think, an extremely compelling reason why we need to move forward in the Arctic and do so in the right way.”

Contact Yereth Rosen at yereth(at)alaskadispatch