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DOI stiffens regulations for Arctic oil and gas drilling

TheU.S. Department of the Interior has issued its final rule for drilling in theArctic Circle, throwing down new regulations that are stiffer than those foroffshore drilling in other areas.

AfterRoyal Dutch Shell plc'sdecision to abandonits exploration plans in the Chukchi Sea earlier this year, there has been nodrilling activity in the Arctic. The DOI moved ahead with the final ruleregardless, meaning that any future drillers in the Chukchi or Beaufort seaswill face stricter regulations.

Therules require companies to have proper planning and controls for oil-spillprevention, containment and responses, which were issues identified in previousreports on Shell's 2012 Arctic activities, the Interior Department's Bureau ofSafety and Environmental Enforcement, or BSEE, said in a statement.

"Theregulations codify and further develop current Arctic-specific operationalstandards to ensure that operators take the necessary steps to plan through allphases of [Outer Continental Shelf] exploration in the Arctic, includingmobilization, maritime transport and emergency response, and the conduct ofsafe drilling operations while in theater," the bureau said.

Therule requires drillers to have two rigs on-site at all times, with the secondto be put to use in case of a blowout on the primary well.

"Theregulations require companies to have access to — and the ability to promptlydeploy — source control and containment equipment, such as capping stacks andcontainment domes, while drilling below or working below the surface casing,"BSEE said.

Manyof the requirements of the rule are without precedent in other regions whereoffshore drilling occurs. BSEE Director Brian Salerno said operating in theArctic requires a special set of regulations.

"Conductingsafe and environmentally responsible Arctic exploratory drilling operationspresents a variety of technical, logistical and operational challenges,"he said. "This rulemaking seeks to ensure that operators prepare for andconduct these operations in a manner that drives down risks and protects bothoffshore personnel and the pristine Arctic environment."

Industryadvocates, including the American Petroleum Institute, panned BSEE'simplementation of the rule. In a statement, API said that much of the finalrule is unnecessary and will only hamper the prospects of future exploration inthe Arctic. API Upstream and Industry Operations Director ErikMilito said the U.S. oil and gas industry has a track record of working withthe federal government to improve offshore safety.

"Thanksto industry efforts and investment, the United States is leading the world inoil and natural gas production as well as in reduced emissions, which are near20-year lows," Milito said.

"Anyregulations that are published should achieve the objectives of protectingworkers and the environment and promoting energy development," he said.