Oil Spills – the NEB isn’t the Only Answer
The Deepwater Horizon, the BP rig that exploded and sank in the Gulf of Mexico, was an exploratory well. Some have said that the ensuing oil spill could not happen here.
This is not true.
It’s not true because, as NEB (National Energy Board) Chair Gaétan Caron has remarked, no regulator can stop accidents from occurring. It’s not true because Canadian regulations administering offshore oil and gas exploration are no stronger than their American counterparts.
In fact, when it comes to regulating WHETHER and WHERE offshore drilling should occur, Canada is remarkably deficient in comparison to the U.S., Norway and Greenland which all conduct formalized and transparent pre-exploration assessments. In comparison, Canada lacks the mandated and robust knowledge base needed to inform and regulate HOW exploration should take place as well as related processes such as oil spill contingency planning.
For example, in the American Beaufort Sea, Shell has recently been given the green light to drill off the north coast of Alaska. BP holds a similar lease in the Canadian Beaufort, 400 km to the northeast – a distance similar to that separating Toronto and Ottawa.
The American process that led to Shell’s permit is fully regulated pursuant to the National Environmental Protection Act. It started in 2003 when the Mineral Management Service (MMS) probed whether to open up portions of the Beaufort coast to drilling. The agency completed a six volume regional environmental impact statement that analyzed, among other matters, various lease alternatives (including not leasing at all), where leasing was not appropriate, the environmental and cultural consequences of leasing and, given a disaster, the trajectory of an oil spill including into Canadian waters. The agency also completed a comprehensive risk analysis that detailed the probability and implications of an oil spill in the Beaufort.
The MMS designed lease block #204 the following year and refined its environmental assessment to the local scale. Shell purchased the rights to that lease block in 2005 and submitted an exploration plan, accompanied by another ‘operational’ environmental assessment customized to its proposed activities in 2007. Shell filed a Regional Exploration Oil Discharge Prevention and Contingency Plan in 2007, then a full Oil Spill Response Plan in 2009. All of Shell’s regulatory submissions were informed by and benefited from the extensive environmental information compiled by the MMS in 2003-2004.
The Canadian process that led to BP’s Exploration Licence started in the spring of 2007 with a nomination process initiated by staff at Indian and Northern Affairs Canada. Using maps generated from previous industry nominations, they consulted local Inuvialuit communities and other government departments. Based upon these results they issued a call for industry nominations for lease areas in autumn 2007. Once industry nominations were in hand, and in reference to an innovative decision support tool that factored in ecological information, requests for bids were developed and posted in February 2008. Four months later, in early June, the sealed bids were opened and the lease awarded to BP, the highest bidder.
The entire Canadian leasing process up until bid requests are posted, including the determination of whether and where to lease in Arctic waters, is unregulated and subject to ministerial discretion. On this basis, BP is granted its exploration licence, a contractual relationship where the company commits to spend its bid amount within five years to drill its first exploratory well. After it receives this licence, the NEB process commences, governing how exploration takes place. The Inuvialuit also administer a separate assessment process. However at no point is a comprehensive environmental assessment (akin to the 2003 MMS document) required by federal authorities during the exploration stage. BP’s regulatory submissions, including its oil spill response plans, do not benefit from the extensive regional information base afforded to Shell in the U.S.
Based upon this comparison, WWF-Canada has three questions for Parliamentarians to consider:
- Given that Shell pledged $44 million for its American lease and BP pledged $1.2 billion for the Canadian one AND given that drilling in either case is not due to commence for 6 – 7 years after each leasing decision, why can we not afford, in terms of time or money, to administer a more rigorous regulatory process?
- Once a company is obliged by a $1.2 billion contract to federal authorities, to drill in Canadian waters within a prescribed time frame, is the NEB placed in a fair position to block or delay such drilling due to environmental or technical considerations?
- Given that the NEB cannot fairly answer the questions above and given limits to its jurisdiction in Atlantic Canada is a broader based enquiry necessary to ensure the offshore environment and the communities it supports are consistently safeguarded from coast to coast to coast?
The study presently being conducted by the Standing Committee on Natural Resources is timely and very important. If offshore drilling is to continue, we must improve the safeguards needed to protect our marine environment, communities and other industries.
