Click here to read the PDF version of this story | Print this story | Email it to an associate

North America's Source for Oil and Gas News
March 2003

Vol. 8, No. 10 Week of March 09, 2003

Showdown B.C.: Offshore political feud heats up

Federal, provincial cabinet ministers clash over 2010 start-up target; Dhaliwal pledges moratorium decision this year; Anderson accused of being a hindrance

Gary Park

PNA Canadian Correspondent

The Canadian government will decide this year whether to lift the 1972 ban on Pacific offshore oil and natural gas exploration, says Natural Resources Minister Herb Dhaliwal, setting the stage for an all-out political battle.

A process is being established to “look at all the environmental, the social and economic considerations and by the end of the year make a decision on the moratorium,” he told reporters Feb. 28.

Dhaliwal also made a case to a House of Commons committee on economic union Feb. 27 for a three-person panel to spend the next six months examining all the issues facing the development of offshore resources.

As well, his department is working with the province of British Columbia to evaluate the concerns.

In joining forces with British Columbia and intensifying his lobbying within the federal government, Dhaliwal has set the stage for a clash with federal Environment Minister David Anderson, who, like Dhaliwal, represents a British Columbia constituency in the House of Commons.

Anderson was adamant in the Commons Feb. 28 that no offshore oil and gas ventures will be embarked on “without a proper analysis of the social, economic and environmental impacts.

“We have to analyze what the benefits and costs from an environmental point of view might be,” he said. “That is all I have asked for, that we have a proper assessment of the potential impact of this industry on the environment of the west coast.”

Federal government has jurisdiction

Canada’s ocean coastlines fall under the sole jurisdiction of the federal government and since 1972 a federal moratorium has blocked any resource exploration of a region estimated to hold 10 billion barrels of oil and 42 trillion cubic feet of gas in four basins.

Anderson has an added personal stake in the future of the offshore. As a federal assistant deputy minister he was instrumental in establishing the 1972 ban.

Since Feb. 13, when the British Columbia government set a 2010 target for oil and gas to flow from the region, Anderson has warned that there is a “big price tag” — projected at C$120 million — to evaluate the impact of earthquakes, tsunamis, wave patterns and ocean currents on exploration and drilling.

He said that cost should be borne by the industry. “Why should they (the E&P companies) be given a free ride out of the taxpayers’ pocket?” he asked.

Anderson’s hard-line has infuriated British Columbia Energy and Mines Minister Richard Neufeld, who on Feb. 28 accused Anderson of “trying to hinder (efforts to lift the moratorium) as much as he can.

“I don’t know what he has against people having well-paying jobs in British Columbia and his home province getting better economically and actually becoming the powerhouse it should be. No one can figure out why he is so much against it,” Neufeld said.

Province moving ahead

The British Columbia government, meanwhile, is driving ahead with its own plans, having released a strategy Feb. 19 that it hopes will include the offshore as a vital plank in generating C$20 billion of new oil and gas investment by 2008.

The plan calls for an agreement with aboriginal and coastal communities by 2004 on offshore development, followed in 2005 by a regulatory agency to grant offshore exploration permits and leases.

The Ministry of Energy and Mines conceded offshore development remains “uncertain,” but insisted the offshore’s potential as a revenue-generator and boost for coastal communities is the best hope for a turnaround in an economically battered region.

A University of Victoria study has forecast offshore development could hold a total value of C$500 billion over 30 years.

As the squabbling among politicians starts to build, the industry is taking a strictly neutral stance.

Industry on hold

Petro-Canada, Chevron Canada Resources and Shell Canada, the leaseholders in the Queen Charlotte Basin, along with the Canadian Association of Petroleum Producers, say they can do nothing until a complex, challenge set of issues are resolved: aboriginal land claims, environmental concerns and the two governments can establish a clear framework of regulations.

Otherwise, British Columbia has laid out a road map that it hopes will see oil and gas contributions to government revenues climb by 17 percent by 2004-05 fiscal year. The list includes:

• Removing “regulatory impediments and delays for doing business in B.C.” by facilitating road access to exploration sites, improving the geologic base of information and boosting development opportunities for unconventional resources such as coalbed methane.

• Increase drilling activity by 20 percent per year to 2005-06 and a doubling of oil and gas production by 2011.

• Implement a regulatory and competitive royalty regime to encourage more exploratory drilling and pilot production projects to tap the province’s estimated coalbed methane resource of 89 trillion cubic feet. A draft copy was released to the industry Feb. 3.

• To eliminate 5,846 of 17,716 of the province’s overall regulations by mid-2004. The province’s Oil and Gas Commission also aims to shrink its total regulatory requirements to 5,197 by 2005-06 from the current 6,200.

Did you find this article interesting? Email it to an associate.
Print this story

Click here to read the PDF version of this story

Test Petroleum News - Phone: 1-907 522-9469 - Fax: 1-907 522-9583
[email protected] --- --- S U B S C R I B E