White House Issues Strict Rules for Arctic Drilling
New regulations could be a disincentive for companies to look for oil in the Arctic.
President Barack Obama just made it even more difficult and expensive to drill for oil in the Arctic.
On Thursday, the White House rolled out a series of new regulatory standards that govern how energy companies can explore the frigid waters of the Arctic for oil. They’re much tougher than similar standards that govern oil exploration and extraction in more developed offshore drilling areas like the Gulf of Mexico.
For instance, drillers will have to store backup drilling rigs close to Arctic operation in case there’s a need to drill a relief well in case of a blowout in an effort to prevent what happened in the 2010 Deepwater Horizon disaster. The biggest fear among environmentalists and many policymakers is that the months-long gusher of oil in the Gulf — located in the heart of the oil-services industry and right next to Coast Guard bases — could be repeated in an area 1,000 miles or more from the nearest airfield. Both President Barack Obama and Canadian Prime Minister Justin Trudeau have pledged not to allow Arctic drilling until the highest environmental standards have been met.
“The regulations we are issuing today support the Administration’s thoughtful and balanced approach to any oil and gas exploration in the Arctic region,” Janice Schneider, Interior’s assistant secretary for land and minerals management, said in a statement.
She added, “The rules help ensure that any exploratory drilling operations in this highly challenging environment will be conducted in a safe and environmentally responsible manner, while protecting the marine, coastal, and human environments, and Alaska Natives’ cultural traditions and access to subsistence resources.”
Industry leaders lobbied hard against the strict regulations, arguing that the added expense of Arctic exploration and drilling would discourage companies from trying to find an estimated 24 billion barrels of oil in U.S. Arctic waters. But after Royal Dutch Shell spent $7 billion in all, it pulled out of the Arctic in 2015, and other oil giants including Shell, ConocoPhillips, and Iona Energy Inc. abandoned leases worth $2.5 billion there.
But that doesn’t mean they won’t want to return in the future, as more Arctic ice melts. A number of foreign companies, like Russia’s Gazprom and Rosneft, are bullish on the Arctic. Another Russian firm, Novatek, has a massive natural-gas project on the Yamal Peninsula, deep in Siberia. Other European firms, such as Italy’s Eni and Norway’s Statoil, have prospects in the Barents Sea.
“This is an unfortunate turn by this administration and will continue to stifle offshore oil and natural gas production,” said American Petroleum Institute Upstream and Industry Operations Director Erik Milito . “We remain concerned about various regulatory activities related to offshore energy development including today’s proposals for Arctic operations.
If oil companies were to get back into the Arctic game in U.S. waters, they’d face a shortened drilling season, because they would have to stop work well before ice is expected to encroach on the area. They must also be able to predict and respond to quickly-changing weather conditions. They would also be required to have equipment on hand to cap oil from a well in the event of a blowout.
In a statement, Eleanor Huffines, senior officer for the Pew Charitable Trusts’ Arctic Ocean-U.S. project, praised the new standards.
“Mandating that capping stacks, second rigs, and containment systems be located near drilling operations will help ensure that if an accident should occur, the capability exists to respond quickly using the best available technology and practices,” she said.
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