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Vol. 15, No. 22 Week of May 30, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Canada scrutiny tougher

Regulator tightens oversight on offshore Newfoundland well in response to Gulf

Gary Park

For Petroleum News

The Gulf of Mexico disaster has made its impact in Atlantic Canada waters, with a regulatory agency tightening its scrutiny of a new deepwater well offshore Newfoundland.

Just 10 days after drilling started, the Chevron Canada Lona O-55 well came under additional oversight “in light of the situation unfolding in the Gulf of Mexico and heightened public concern over drilling operations currently under way” in the Orphan basin, the Canada-Newfoundland and Labrador Offshore Petroleum Board announced May 20.

The conditions require officials from Chevron and the Swedish drilling contractor Stena AB to meet weekly with regulators to review matters of interest.

The companies will also face onboard inspections every three or four weeks, compared with the normal three to four months.

Before they penetrate the hydrocarbon zones, Chevron and Stena must take a “time out” from their operations to satisfy the regulator that “all appropriate equipment, systems and procedures are in place to allow operations to proceed safely and without polluting the environment.”

That delay could range from a few hours to a full day, a board spokesman said.

Chevron must also provide the board with field reports on its testing of the blowout preventer and the last results of the three ways to activate the preventer should something go wrong.

Chevron: safety practices reviewed

Chevron said it will cooperate “fully” with the regulator, noting that safety practices have already been reviewed in light of the BP accident.

Chevron Vice President David MacInnis told the Globe and Mail that his company recognizes the significance of events in the Gulf and “along with the rest of the industry, wants to understand what caused the incident so we can apply any lessons to further enhance our safety, environmental protections and reliability.”

Mark MacLeod, Atlantic Canada manager for Chevron, told the St. John’s Telegram, Newfoundland, said drilling of the Lona O-55 in about 8,500 feet of water — a Canadian offshore record — is going “very well” and on track for completion within the targeted three months.

He said Chevron has no plans to test the well, which will be plugged and abandoned once drilling concludes. A team of safety officials is aboard the Stena Carron drillship.

As part of two environmental assessments, the Chevron-led consortium said in 2005 that “recovery of spilled oil off the coast of Newfoundland will be extremely difficult and inefficient for large blowout spills.”

The assessment estimated the probability of a “very large spill” of more than 10,000 barrels at 0.026 percent and the probability of one exceeding 1250,000 barrels at 0.0086 percent.

The filing with the offshore board said that prevailing rough seas off Newfoundland likely would mean containment and recovery efforts could be ineffective and the wide scope of a deepwater blowout would mean that no more than 12 percent of a spill could be recovered under typical conditions.

A statistical modeling of 14,600 trajectories indicated that a large spill would not reach the shore.

Board reviewing its practices

The offshore board spokesman said the regulator has been informally reviewing its practices since the Deepwater Horizon blowout, regarding that as a “prudent” measure for any regulator, given the magnitude of the Gulf events.

He said the board is paying particular attention to a combination of equipment failures, failure to follow procedures and failure to have rig hands properly trained.

Events unfolding in the Gulf also mean that a federal moratorium on offshore oil and gas development in British Columbia will not be lifted any time soon, said Environment Minister Jim Prentice.

“It’s in place and there’s no changing of rules at this point,” he told the Vancouver Sun. “Obviously what’s happened in the Gulf of Mexico has reinforced the desire for all of us to be careful. Nobody wants that to happen in Canada.

“We’re all appalled by what we’re seeing in the Gulf. The true environmental cost is only now becoming apparent that this stuff is starting to wash ashore,” he said.

Prentice: sensitivities raised

Prentice said there is no question that the Gulf disaster has raised sensitivities, putting offshore drilling and transport under greater scrutiny.

Although the British Columbia offshore is estimated to hold 41.8 trillion cubic feet of gas and 9.8 billion barrels of oil, there has been no industry pressure to remove federal and provincial bans which were imposed after the Exxon Valdez events.

However, the British Columbia government did open discussions with the federal government on the possibility of reviewing the bans.

Asked about Enbridge’s proposed Northern Gateway pipeline to carry oil sands production from Alberta to Asia, Prentice said the project is “important to the country as a whole,” but will get a thorough regulatory examination.

“I am well aware of how important it is to secure aboriginal involvement in this project and secure their support,” he said.

Two environmental groups, Ecojustice and the Sierra Club, are less than convinced about Prentice’s environmental concerns, pointing to proposed changes to legislation that they say would reduce the government’s environmental oversight of projects.

On that matter, Prentice said the government should “not be using precious resources to do environmental assessments when we know from prior experience there is no negative environmental outcome.”

He said provincial governments, notably British Columbia, have complained that the federal environmental review process unnecessarily slows projects with “green tape” that duplicates provincial work.

“Someone has to make the choice,” Prentice said. “Somebody has to be responsible. Do these changes (to legislation) eviscerate environmental protection in Canada? Clearly not.”



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