Andrew Mayeda, National Post, Nov. 3, 2010
OTTAWA — Canada’s natural resources minister has been warned by officials in his department that the federal government would be powerless to unilaterally halt offshore drilling projects in areas where regulatory oversight is shared with the provinces, Postmedia News has learned.
For now, the limit on federal powers only applies off the coasts of Newfoundland and Nova Scotia. But documents obtained exclusively by Postmedia News also reveal the federal government has entered into “informal” discussions with other provinces with coastal waters where oil exploration could one day take place, including Quebec, British Columbia, New Brunswick and Prince Edward Island.
The documents suggest the federal government could run into jurisdictional battles with the provinces if it sought to impose a national moratorium on offshore drilling, as the administration of U.S. President Barack Obama did in the wake of this summer’s massive oil spill in the Gulf of Mexico.
A blowout at BP’s Macondo well on April 20 unleashed the biggest oil spill in history. In late May, Mr. Obama suspended the issuance of new deepwater-drilling permits and shut down all such drilling underway in the Gulf. BP sealed the well in July, but only after it had spewed more than four million barrels of crude oil.
The U.S. government finally lifted the moratorium last month, while at the same announcing tough new drilling rules.
Internal emails show that, as the Gulf disaster unfolded, the office of Natural Resources Minister Christian Paradis — as well as the Prime Minister’s Office — took a keen interest in how Canada might handle a spill on the same scale.
This summer, Chevron Canada conducted exploratory drilling off the Newfoundland coast at a depth of 2,600 metres — more than a kilometre deeper than Macondo and the deepest ever drilled off Canada’s coasts.
Under the Atlantic Accord deals with Newfoundland and Nova Scotia, drilling off the coast of those provinces is regulated by joint federal-provincial offshore petroleum boards.
In a briefing note for Paradis on the Chevron project, a policy adviser at Natural Resources Canada notes the minister generally has the authority to suspend any oil and gas activities. But under the accord, “This power has been given to the offshore boards,” the official states.
The government of Newfoundland Premier Danny Williams has called offshore projects “critical” to the province’s economy. A consultant hired by the government to review the province’s drilling rules is expected to report back this month.
A spokesman for the Canada-Newfoundland and Labrador Offshore Petroleum Board said Mr. Paradis and his provincial counterpart have the power to issue “joint directives” to the board to freeze offshore projects.
A presentation prepared for Mr. Paradis by department officials refers to an “informal dialogue” with B.C., Quebec, P.E.I. and New Brunswick on “joint management with provincial governments” of offshore resources.
There are currently three oil-production rigs operating off Newfoundland’s coast and one natural-gas platform off Nova Scotia. Several oil companies have acquired licences to explore off Canada’s Arctic coast, but drilling isn’t expected to occur for at least a couple of years. A long-standing moratorium prevents drilling off B.C.’s shores.
Other provinces are also getting into the mix.
A junior exploration firm was recently given the green light by the Newfoundland offshore board to conduct a geo-hazard survey in the Gulf of St. Lawrence. That hasn’t sat well with Quebec, which has banned development in its share of the Gulf.
A chart prepared for Mr. Paradis illustrates the patchwork nature of Canada’s regulatory system. In areas not covered by the Atlantic Accord, for example, Natural Resources Canada grants exploration leases and collects royalties south of 60 degrees latitude, while the Department of Indian and Northern Affairs handles those responsibilities north of 60.
The National Energy Board issues drilling permits and regulates exploration.
Under U.S. reforms, all those functions will fall under the authority of a single agency, although they have been separated into different divisions to avoid conflict.
On May 28, Mr. Paradis told the House of Commons that Canada has the “toughest environmental regulations in the world.” But Natural Resources Canada officials paint a more nuanced picture.
At the request of Mr. Paradis’ office, department officials prepared a briefing note that compares regulations in Canada with rules in the United States and Norway. It points out that when it comes to the installation of safeguards, such as blowout preventers, Canadian rules are generally vaguer.
The government enacted new rules last December that require oil companies to meet certain safety goals, but give them more flexibility on what equipment they can use to meet those goals.
“U.S. regulations appear more prescriptive in that they generally provide more detail respecting how an activity is to be completed,” states the note, which was submitted on May 18 to officials in charge of corresponding with Paradis’ office.
A spokesman for World-Wildlife Fund Canada said “goal-oriented” regulation leaves rooms for companies to come up with innovation technology that can improve safety. But the results need to be clearly measurable for such rules to be effective, said Martin von Mirbach, Arctic program director for WWF-Canada.
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