If or when oil explorers return to the U.S. Arctic Ocean, they'll face tough, new safety standards that could cost industry around $2 billion, according to rules issued by the Interior Department on Thursday.
The new rules will set standards similar to those employed by Shell, which halted its exploration program in September after spending more than $6 billion in a failed quest to find oil in the Chukchi Sea off Alaska's northwest coast.
The rules include having equipment on hand to stop oil spilled after a blowout, such as stationing a second drilling rig nearby to punch a relief well, and spill-response equipment like a containment dome to capture escaping crude.
Sen. Lisa Murkowski, R-Alaska, and chair of the Senate Energy and Natural Resource Committee, said the updated rules add new requirements that will discourage investment in the Arctic offshore.
"This rule should be a positive sign for the administration's willingness to offer new leases in the offshore Arctic, but instead it continues to hint toward an even more uncertain future for the regulatory regime in this region," Murkowski said. "I am dismayed by the regulatory onslaught the administration is launching on American energy production in its final days."
Industry supporters, and drilling critics, found something to praise and to criticize in the new regulations, which come as industry interest in the presumably oil-rich region wanes and companies cancel their leases. Now, both sides are fighting over a pair of future lease sales proposed for the region in 2020 and 2022, but not yet finalized.
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Rebecca Logan, general manager of the Alaska Support Industry Alliance, said the rules are "strict" and will be costly. But they suggest a lease sale might still be held.
"This makes me wonder why they'd put out these regulations if they are going to remove those lease sales," she said. "So my first reaction was a positive, anytime we don't close the door on an opportunity, that's a good thing."
Michael LeVine, with environmental group Oceana in Juneau, said the new rules are "an important step in the right direction," but not enough to solve all the problems associated with Arctic exploration.
"There is no proven way to respond to a spill in icy waters, and until companies demonstrate they can operate safely we should not authorize exploration or selling leases," he said.
Thursday, Interior officials stressed that the rules have no connection to potential lease sales. The agency proposed the rules in February 2015, leading to more than 100,000 individual comments, officials said.
The rules are rooted in lessons learned from Shell's effort to drill in the region, culminating in the grounding of the Kulluk drilling rig off the coast of Kodiak in 2012 far from the Arctic drilling sites, officials said.
Interior officials called the regulations "unique" and "world-class," and said they will protect a sensitive "frontier environment" unlike anywhere else in the United States.
Explorers "face extreme weather, frigid waters and sea ice" in a remote region with limited infrastructure and logistical support, said Brian Salerno, director of the U.S. Bureau of Safety and Environmental Enforcement.
The rules call for the submission of an "Integrated Operations Plan" — something Shell provided in 2015 in a precursor to the rule — 90 days before an exploration plan is submitted.
The integrated plan will ensure operators give careful thought to the entirety of their operations — from mobilization to departure from the region — and give permitting agencies an early look at everything from contractors to equipment to maintenance schedules, officials said.
The requirement stemmed from Interior's review of Shell's 2012 season, when the agency determined that "a deficit in planning" and a lack of contractor oversight were central to the company's problems, said Abigail Ross Hopper, director of the U.S. Bureau of Ocean Energy Management.
One of the costlier measures will be the requirement of a second drilling rig on site to dig an emergency relief well. That's not necessarily a problem in the Gulf of Mexico where there is significant industry activity and multiple drilling efforts, but there's no certainty there will be multiple rigs available in the Arctic Ocean, said Salerno.
The rules note compliance could cost industry $1.75 billion to $2 billion over a 10-year period.
Kara Moriarty, president of the Alaska Oil and Gas Association, said on Thursday her group was still going through the report's 348 pages. The new regulations appear "cumbersome," with specific requirements that may not best protect the environment in the future if technology changes and companies return to the region.
"At first blush, this creates several layers of requirements that will do nothing to attract oil companies back to the Arctic when oil prices rebound," she said.