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Vol. 15, No. 34 Week of August 22, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Canadian Senate opposes offshore ban

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Gary Park

For Petroleum News

There is no need to ban drilling in Canadian coastal waters, given that current legislation and the regulatory regime is “among the most stringent and innovative in the world,” the Canadian Senate’s energy, environment and natural resources committee said Aug. 18.

Wrapping up six weeks of public hearings in the aftermath of BP’s Macondo well blowout, the bipartisan committee rejected calls for a moratorium in the Atlantic region, where Chevron Canada is drilling its Lona O-55 well in 8,500 feet of water in Newfoundland’s Orphan basin. It saw no reason why a calamity on the scale of the Gulf of Mexico spill could occur in Canada.

Chevron started drilling the Lona well on May 9, barely three weeks after the explosion on BP’s Deepwater Horizon rig.

“The offshore industry is a very risky one and a highly costly one and to interrupt and stop an operation just because of possible fears isn’t necessarily a wise course of action,” said committee Chairman Sen. David Angus.

He said the committee was satisfied that “the regulatory regime in Canada, both provincial and federal, is a good one,” based on evidence it heard from 26 witnesses, including regulatory experts and industry executives.

Sen. Grant Mitchell, a Liberal from Alberta, said the committee sought a balance between economic and environmental concerns.

He said the report emphasized the huge financial benefits that flow to Canada from allowing companies to explore and develop the offshore.

The committee did not examine the Arctic, which is under a comprehensive review by the National Energy Board, including the need for relief wells to be drilled in the same season as a blowout, or British Columbia’s offshore, which is off limits to oil and gas exploration because of a post-Exxon Valdez moratorium.

Water deeper at Lona

Chevron’s Lona well, which is being drilled in water much deeper than the Macondo well, is being conducted “under very careful supervisions. … We found no need or any justification or any evidence which would lead us to recommend that the operation be stopped,” Angus said.

The committee recommended:

• Exploring in greater detail the structure and role of Canada’s offshore petroleum boards (in Newfoundland and Nova Scotia) to determine whether there might be a material conflict between the boards’ roles as promoters of development and environmental stewards;

• Greater collaboration between all those responsible for responding to an oil spill in developing, preparing and practicing in advance of an event;

• A comprehensive review of liability issues, including whether the thresholds should be adjusted to reflect current economic realities; and

• A thorough discussion by regulators and industry respecting whether and under what circumstances relief wells should be ordered.



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