Comments on spill rules run the gamut

Posted: Monday, September 27, 2010

Legislators were peppered with suggestions and criticisms of Alaska's state oil spill rules, but there was also praise from some for the state's standards.

"It's one of the best programs in the nation, but there's still room for improvement," Mike Munger, director of the Cook Inlet Regional Citizens Advisory Group, told the Senate and House Resources Committees Sept. 21.

North Slope Borough officials also told legislators they are pleased at responses by Shell Oil and the new Bureau of Ocean Energy Management, the new U.S. Minerals Management Service, to concerns raised by coastal communities on exploration in the Beaufort and Chukchi seas.

"We are seeing some positive signs," said Harold Curran, the borough's chief administrator, who was speaking for Mayor Edward Itta, who could not attend the meeting.

However, the borough is still urging that additional protections in offshore drilling, some adopted by Shell voluntarily, be codified in regulations, such as requirements for blowout preventers with double sets of "rams," or closure devices.

In a related development, state administration officials told the legislative committees that state agencies would review industry facility and field pipeline maintenance programs as a part of several steps of tightened regulation and oversight.

State Oil and Gas Director Kevin Banks told lawmakers that the review of company maintenance quality management programs will be conducted by the Petroleum Systems Integrity Office, or PSIO, a group within the Oil and Gas Division.

Details of the program, which are among a series of regulatory steps the state will take to improve safety, will be presented to industry in about a month, Allison Iverson, the PSIO director, said in an interview.

Iverson said the objective is not for the state to seek to approve maintenance programs but to define best practices among the Alaska operators to serve as examples for others, particularly smaller companies now engaged in exploration and field development in Alaska.

Industry sources, in interviews, expressed some concerns that the PSIO may gradually increase its authority in oversight on maintenance to the point of eventually requiring approval of plans. The state has broad authority to regulate industry practices on state-owned lands, and virtually all of Alaska's production comes from fields on state lands.

Banks told legislators that Gov. Sean Parnell ordered the review of state regulation of oil and gas producers earlier this year after the blowout of BP's Gulf of Mexico well. However, the idea of PSIO reviewing maintenance has its roots in the 2006 oil spills from Prudhoe Bay field pipelines, which BP also operated. Those spills were related to corrosion, which has been linked to problems with maintenance programs.

Other regulatory changes Parnell may order may include a transfer of approvals for industry blowout protection and relief well drilling contingency plans from the DEC to the Alaska Oil and Gas Conservation Commission because that agency has more technical capabilities in drilling than the DEC, Banks and Department of Environmental Conservation Commissioner Larry Hartig told the legislators.

The oil and gas conservation commission, an independent agency, is doing its own review of deep water and ultra-extended reach bottom-hole completion techniques but will withhold recommendations until the presidential commission on the Deepwater Horizon disaster has issued its report, commission Chairman Dan Seamount told legislators.

Praise for Alaska's oil spill rules at the hearing was tempered with criticism and a lot of suggestions for improvements.

"Alaska's standards are miles ahead of other states, but there are still holes. Industry can meet the standards, but only in good weather," said Mark Swanson, executive director of the Prince William Sound Regional Citizen Advisory Council.

The Price William Sound RCAC and its counterpart in Cook Inlet, headed by Mike Munger, are citizen panels formed under U.S. Coast Guard rules to perform oversight on industry spill planning.

Swanson and others said the state should do more to encourage use of best technologies. The Legislature adopted a law after the 1989 Prince William Sound Exxon Valdez spill requiring that best technology be incorporated by industry as 5-year state spill containment plans are renewed, but then weakened the statute in later amendments so that all containment and cleanup systems are not covered by the requirement, said Nancy Wainwright, senior staff attorney for Trustees for Alaska, an environmental law firm.

An important defect in the current state law is a 1997 amendment by the Legislature that any technology system seen as capable of meeting the state's cleanup standard be automatically deemed "best available technology" and meeting the legal requirement that the best technology be used.

"This will allow an old technology to be used that on paper can meet the state standard," she said. It effectively removes any incentive to adopt improved technologies.

Still, Alaska's rules have more teeth than those of other states and of the federal government in the outer continental shelf, most who testified at the hearing said.

DEC Commissioner Hartig said Alaska's spill laws adopted after the 1989 Prince William Sound Exxon Valdez spill require oil producers and tanker operators to obtain state approval of spill contingency plans every five years and to have equipment and personnel to clean up spills of certain sizes.

The state's rules apply in federal outer continental shelf waters around Alaska through the federal compliance with the state Coastal Zone Management Program, Hartig told legislators.

One suggestion made in the Sept. 21 hearing that state environmental officials said they would consider is a prohibition on using spill equipment more than 20 years old, or alternatively a requirement that older equipment be tested and certified. Larry Dietrick, director of the state spill response division, said the idea was worth considering.

There were also suggestions that the state spill response standard that requires industry to be capable of cleaning up an offshore blowout of 550,000 barrels daily for 15 days is unrealistic given the experience of shutting off BP's Gulf of Mexico blowout, which took months.

Other suggestions made by the North Slope Borough include rules that if a blowout preventer is installed below the sea-floor on an offshore exploration well a second blow-out preventer to be in place on the drilling ship or jack-up rig, as a backup.

The government should also impose seasonal drilling restrictions in OCS waters similar to those imposed by the state of Alaska in state-management offshore waters, chief administrator Curran told the legislative committees.



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