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Vol. 11, No. 49 Week of December 03, 2006
Providing coverage of Alaska and northern Canada's oil and gas industry

Olympic-size dreams revived

B.C. premier wants offshore gas in ‘2 or 3 years;’ feds cool to lifting moratorium

Gary Park

For Petroleum News

In a moment of over-exuberance, British Columbia Premier Gordon Campbell once said he hoped to use natural gas from the province’s offshore to ignite the flame at the 2010 Vancouver Winter Olympic Games.

So much for grand dreams.

Even with a federal government in power that is more likely than its predecessor to support drilling, the wheels have been grinding slowly.

Time for Campbell to stir the pot again.

Speaking in Hong Kong, he suggested that in “two or three years” opportunities to end a federal moratorium on development would “expand.”

He said British Columbia and the federal government “are spending millions of dollars to do the science so we can conduct drilling in an environmentally responsible way.”

Flurry of denials, clarifications, challenges

Some immediately jumped to the conclusion that Campbell was actually setting a bold timetable for drilling the offshore, setting off a flurry of denials, clarifications and challenges.

Federal Natural Resources Minister Gary Lunn, who represents a British Columbia constituency in Parliament, said he had no idea where Campbell developed the idea that the ban might be lifted in two or three years.

“It’s not on our agenda and we have no intention of putting it on,” he said.

Lunn also said major progress toward a resolution of First Nations land claims needs to occur.

B.C. Energy Minister Richard Neufeld said the premier’s remarks may have been misunderstood, emphasizing that the province has said repeatedly that the moratorium should end only after full research and consultation has been conducted.

“We have always said we wouldn’t do it until the science was complete,” he said. “There is still a fair amount of work to be done and (Campbell) recognizes that.”

Environmental community furious

But Campbell’s speech infuriated the environmental community.

Oonagh O’Connor, a spokeswoman for B.C.-based Living Oceans Society, accused the premier of being “unrealistic,” arguing the government would need a lot of support it doesn’t currently have to open the offshore to development.

Society Executive Director Jennifer Lash said Campbell had grossly underestimated the volume of research needed to identify the risks associated with exploiting offshore resources.

She said it would be impossible to complete that task in two or three years.

In addition, the government could not count on the backing of the majority of B.C. residents, Lash said.

Guujaw, president of the Haida Nation, which claims title to the Queen Charlotte Islands and Hecate Strait, said the province also faces a major obstacle in resolving ownership of the region.

On the flip side, John Hunter, a director of Ocean Industries B.C., told the Vancouver Sun that “modern practices and appropriate regulation” have shown over the last 25 to 30 years that the risk of offshore development can be reduced.

He noted that Newfoundland and Nova Scotia are not burdened by bans, while Norway, the United Kingdom and Trinidad among others are not under any public pressure to return to pre-offshore days.

In early 2003, Campbell set the ball rolling to remove the 1972 federal ban by targeting 2010 to have an offshore industry “up and running” to develop resources estimated at 10 billion barrels of oil, 41.4 trillion cubic feet of discovered conventional and tight gas and 35 tcf of conventional undiscovered gas.

Decision expected in 2004

In 2004 a federal panel was expected to decide whether B.C. was in a position to commence exploration of a region the U.S. Interstate Oil and Gas Compact Commission recently said holds more reserves under moratorium than any other North American jurisdiction.

Instead, the panel put the spotlight on what it described as a “vigorously polarized” province, with deep divisions covering environmental groups, small business proponents, corporate interests, scientists, politicians and average citizens.

In a widely disputed conclusion, the panel also said 75 percent of those making presentations at its hearings endorsed upholding the 1972 moratorium — a finding that prompted Neufeld to dismiss the report as “useless.”

Since then the province has financed further scientific research, consulted aboriginal communities and gained support from some coastal community groups, basing some of its arguments on the prospect of offshore production eliminating oil imports to B.C. which cover all but 13 million barrels of the 65 million-70 million it consumes annually.

The election of the pro-business Conservative federal government in January raised Neufeld’s hopes that Ottawa would revive action on the file, allowing the industry to embark on seismic programs.

To the surprise of B.C., Lunn has shown no inclination to move forward, passing up the chance for formal talks and contending that despite the potential economic benefits of an offshore industry he wants more precise estimates on the recoverable reserves.

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Newfoundland premier: Don’t quit

The advice was likely welcomed in some quarters. The source might have caused qualms.

Newfoundland Premier Danny Williams, noted for locking horns with the petroleum, industry and the Canadian government, traveled from one side of Canada to the other to tell a British Columbia audience that the western province’s offshore oil and gas resources should be exploited as one of Canada’s best prospects for economic growth.

Speaking to the B.C. Chamber of Commerce on Nov. 27, he urged backers of offshore development to focus more on the opportunities than the challenges of removing a federal moratorium on exploration and the challenges of overcoming opposition.

He said Newfoundland’s own experience in bringing three oil fields (Hibernia, Terra Nova and White Rose) on stream, along with development of its Voisey’s Bay nickel deposit, lifted the province from the bottom to the top of Canada’s economic growth rankings.

Newfoundland now has its lowest unemployment rate in 25 years, has seen its labor force grow by 9 percent annually since 1996 and will enjoy a 4 percent rise in personal income this year.

Williams expressed confidence that the petroleum industry would find ways to minimize any adverse environmental impact from exploration and development.

Quoting Winston Churchill, Williams said: “It’s very easy to be very pessimistic and I can give you five reasons to say why not.”

He said the B.C. offshore could play a key role in Prime Minister Stephen Harper’s dream of making Canada a global energy powerhouse.

He encouraged the chamber to ensure interest in the offshore does not wane.

“You need to work with those who are confident, but you also need to educate those that are negative so that you can show them the benefits that will come,” he said.

Chamber President John Winter said anyone aware of the formidable challenges of achieving oil production in the North Atlantic is aware that obstacles can be overcome.

He said the difficulties posed by the B.C. offshore are no different from those in Newfoundland.

—Gary Park