By Carrie Tait, Financial Post, August 18, 2010
CALGARY -- Canada’s offshore drilling rules must not be so stringent that the industry is hampered and must find a balance between environmental restrictions and economic benefits, a Senate committee said Wednesday.
The committee on energy, the environment and natural resources delivered six recommendations it wants governments and regulators to consider — chief among them to avoid a ban on offshore drilling.
“It was very clear the study had to focus on this tradeoff, the balance, between economic benefit and environmental and safety risk,” David Mitchell, an Alberta senator and deputy chairman of the committee, said as the report was delivered in Ottawa.
The 12-person committee said governments and regulators need to further discuss the pros and cons of relief wells; explore potential conflicts of interest offshore regulatory watchdogs may have; increase collaboration among those responsible for developing, preparing, practicing spill responses; and do a “comprehensive review of the issue of liability, including whether the thresholds should be adjusted to reflect current economic realities.”
Operators should be required to organize emergency spill response drills regularly.
The committee launched a fact-finding mission to explore Canada’s offshore drilling industry after BP PLC’s Gulf of Mexico disaster.
“What we wanted to find out was is there any imminent danger [in Canada to have an] ecological situation [like that] in the Gulf,” senator and committee chairman David Angus said. “We found there was none.”
He stressed there is only one offshore drilling effort underway in Canada, a Chevron Corp. project off the East Coast. While there are four oil and gas projects operating off Newfoundland and Labrador and Nova Scotia, those are producing projects, putting them in a different category.
Canada’s Pacific waters are under a drilling moratorium, and there is no drilling activity in Canada’s Arctic zone. Licences have been issued, but 2014 is the earliest an operator could drill there.
Chevron, along with regulators from Newfoundland and Labrador, testified before the committee about the sole drilling project, which is 430 kilometres northeast of St. John’s.
“The first thing they all pointed out to us was the …apples and oranges [comparison] to the Gulf of Mexico and its sensitive coastline, with all of these fishing grounds and ecologically sensitive areas for wildlife and the like,” Mr. Angus said. “Out in the middle of the Atlantic Ocean, the likelihood, we were told, and they based it not on huge spills because they hadn’t had them, is that the escaping crude will disperse, probably without ever affecting any sensitive areas, and certainly nothing in the order [of the Gulf spill].”
The Canadian branch of the World Wildlife Fund applauded parts of the committee’s findings, while charging others came up short.
Robert Powell, director for the Mackenzie River basin, said the committee deserves credit for pushing regulators to re-examine Canada’s liability regime, explore potential conflicts of interest regulators may have, debate the merits of relief wells, and admitting offshore drilling is a dicey enterprise.
He thinks there should be a ban on Arctic drilling. “Not a permanent moratorium, but one that lasts until the public can be assured drilling can be done safely. Our research shows us that it is extremely difficult, perhaps even impossible, to clean up a major spill under Arctic conditions,” he said.
Financial Post
ctait@nationalpost.com
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