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Canada’s Arctic stirs: offshore activities ban ends term in 2021
Gary Park for Petroleum News
To all intents petroleum activity in Canada’s Arctic slipped quietly into a deep and indefinite sleep in 2016.
That was when the government of Prime Minister Justin Trudeau imposed a moratorium on approved offshore activities, along with repaying the balance of any final deposits by exploration permit holders and suspending any oil and gas activities for the duration of a five-year moratorium ending in 2021.
The government also agreed to work with the Northwest Territories, Yukon and Nunavut, indigenous communities and the industry to develop a framework for a science-based, life-cycle impact assessment review every five years, taking into account marine and climate change impacts.
For environmental and many First Nations organizations it was the breakthrough they had long sought and left a widespread impression that Arctic exploration might have been shelved for good - a view that was reinforced as companies such as Imperial Oil (and its parent ExxonMobil) and Chevron shuttered their northern operations and suspended regulatory work and planned submissions.
Imperial insisted in a letter to the National Energy Board that it remained “committed to the Arctic as an important future source of energy.”
Chevron put its Beaufort plans on hold indefinitely, citing “economic uncertainty.”
Call for assessment But it now appears that the freeze on activities has far from halted work on developing new Arctic technologies or low-key lobbying of the Canadian government to support an independent geological, technology, commercial and economic assessment of oil and gas potential in the region over the next 30 years.
The first test of how receptive the federal government might be will occur when the ban on issuing new exploration licenses ends its first five-year phase in 2021.
If the Trudeau administration is toppled in an election this October it could mean a transfer of power to a Conservative government led by Andrew Scheer, who is likely to be more receptive to overtures from the petroleum industry to revive Arctic exploration.
Paul Barnes, Atlantic Canada and Arctic director of the Canadian Association of Petroleum Producers, has suggested to Canada’s annual Arctic oil and gas symposium and reporters over the past two years that the moratorium has seen Canada “fall behind” the United States and other nations in advancing plans to develop its vast Arctic natural resources.
He said earlier in March that recent indications President Donald Trump might agree to reopen the Alaska Arctic illustrates Canada’s “lost opportunities,” while countries such as Norway and Russia are moving ahead in their competition for investment dollars to embark on Arctic drilling or undertake related research.
However, he suggested that successful exploration in the U.S. sector of the Beaufort Sea could “increase attention” from prospective investors in Arctic development.
Consultation Even Canada’s Northern Affairs Minister Dominic LeBlanc has not ruled out the prospect of resource development, describing the moratorium as a way to advance scientific and technological methods of ensuring any exploration is environmentally sensitive.
LeBlanc told The Canadian Press that the 2016-21 period is being used to consult with indigenous people, governments and industry to prepare a science-based report to inform the federal review of the moratorium in 2021.
“Done properly, oil and gas development can bring growth and prosperity to a region that in some cases may have been overlooked for a long time,” said LeBlanc.
“However, the development must be done properly with the full support of scientific data and research.”
Barnes, in his presentations, has noted that more than 300 wells have been drilled in Canada’s Arctic spread over close to 70 years, resulting in more than 100 discoveries and many thousands of miles of 2-D and 3-D seismic surveys.
“The region remains vastly unexplored, but has high potential for future discoveries,” he said.
Improvements in technology Barnes has argued that oil and gas activity can safely occur in the Arctic without harming the environment, with offshore technology moving ahead in areas such as marine seismic noise reduction, design and construction of new Arctic class drilling units, ice management, safe drilling and production operations, well-control prevention and response, and oil spill prevention and response.
“There are significant policy and regulatory challenges that must be overcome to capitalize on (the region’s) potential,” he said.
He conceded that although Canada’s oil and gas regulatory regime is “robust,” it also requires modernizing.
Barnes said the upcoming five-year review would be assisted if industry and governments can provide a “realistic and credible economic appraisal on the future and times of Arctic oil and gas potential,” calling for an independent study covering geological, commercial and economic issues.
He suggested research and development priorities could include:
*Commercialization of remote sensing technologies and advancing northern capacity to deliver remote sensing services.
*Advancing resource development and safety and security applications.
*Iceberg detection, threat analysis and drift forecasting and towing automation.
*The detection and mitigation of oil spills in sea ice.
*Advancing Arctic knowledge to improve economic opportunities, using the resources of Canada’s High Arctic Research Station.
- GARY PARK
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