Blog Post

On Proposed Regulations for Arctic Offshore Oil Drilling

Aug 21, 2014 | Molly K. Macauley

This entry previously appeared as a comment on the National Journal’s Energy Insiders forum “Can Arctic Drilling Be Done Safely?”.

On August 15, the Obama administration took a long awaited step forward in the development of safety standards for Arctic offshore drilling operations. The submission of proposed regulations by the Department of the Interior (DOI) to the Office of Management and Budget provides a key juncture to assess the outstanding questions and considerations needed for “safe, responsible, and effective drilling activities on the Arctic Outer Continental Shelf.” My colleague, Katrina McLaughlin, reminds us of a few preliminary points worth making.

Arctic drilling has been occurring for decades and other countries will continue to evolve their energy industry in this region. But the Arctic is undergoing profound change that affects the operating environment. Risk assessment in the Arctic cannot be only retrospective and based on past experience. It must also be forward looking and adaptive to the latest scientific information. The new ice regime is more mobile and unpredictable, wave heights are unprecedented, and coastal erosion and permafrost degradation threaten infrastructure.These new operating parameters will also necessitate large investments from both industry and government—including in polar-class ice breakers, ice-capable drilling rigs, and expanded transportation, communication, and monitoring networks.

With these conditions in mind, what should the proposed regulations look like? This has been an active research area, and federal regulators have many sources they can consider. For those interested in reading the recent literature, a good place to start is the in-depth report on oil spill prevention and response prepared by the Pew Charitable Trusts last year, prior to the original anticipated release date of DOI regulations. Pew provides detailed recommendations on every stage of the exploration and production process, with an emphasis on seasonal drilling limits and redundant safety practices. The National Academies just released the final version of its Responding to Oil Spills in the US Arctic Marine Environment report, which covers existing data gaps and recommended Arctic capabilities. Finally, the Arctic Council has several publications from the Protection of the Arctic Marine Environment (PAME) and Arctic Monitoring and Assessment Programme (AMAP) working groups focused on the Arctic oil and gas sector and which have the added benefit of providing a circumpolar perspective on Arctic operating practices. These publications include the Arctic Offshore Oil and Gas Guidelines (2009) and a follow-up report on Systems Safety Management and Safety Culture (2014), among others.

Collectively, these and other assessments remind us of several key questions for regulation to address:

  1. Incomplete information and operating under uncertainty—what are the necessary benchmarks for best available science and key baseline data needed to proceed? Better industry-government-local coordination, including more information sharing and regulator access to relevant industry data, could go far in filling these gaps.
  2. Irreversibility—to what extent and under what scenarios does increased offshore energy development place endangered, endemic, and subsistence species at critical risk? What standards and practices will reduce these risks?  These questions require consideration of key ecological dynamics across time and space, including understanding subsistence use as well as better baseline data of ice and weather conditions and ecosystem functioning.
  3. Social harm—what are the consequences, both routine operating impacts and crises such as an oil spill, to local communities? And, what are the social consequences of not developing Arctic resources?
  4. Building a “culture of safety”—can DOI lead us beyond the level of minimum technical requirements to a mix of performance and technical based standards centered on safety?  A lesson from the Deepwater Horizon spill was just that: the need for safety performance to figure prominently across the culture of our regulatory agencies (see a 2010 RFF discussion paper on safety culture).
  5. Precursor analysis—can we do analyses in advance to prevent accidents? Here, strong and useful lessons are provided by our experience in regulating nuclear reactors (see a 2010 RFF discussion paper on precursor analysis).

Like so many resource decisions, the stewardship of Arctic development is both a tremendous opportunity and a consequential responsibility. Industry, regulators, and the public should remain cognizant of the lessons learned developing past resources at the technology frontier. The potential resources are significant and their safe development merits the utmost creativity of both the public and private sectors.