BC offshore back in spotlight

Think tank cites revenue potential from coastal waters, says benefits outweigh risks; opponents warn of ‘catastrophic’ dangers

Gary Park

For Petroleum News

Just as British Columbia is embroiled in one of the most divisive energy issues in its history, a topic of equal magnitude has landed in the province’s debating arena.

The Fraser Institute, a conservative-leaning think tank, issued a finding that lifting a moratorium to open up the province’s offshore to oil and natural gas exploration would yield economic benefits far outweighing the environmental risks.

For British Columbians the timing of the study couldn’t have been worse as they grapple with plans by Enbridge and Kinder Morgan to build pipelines from the Alberta oil sands to tanker ports on the B.C. coast.

The offshore has remained dormant over more than five years, with no attempt by either the B.C. or Canadian governments to restart talks on finding ways to allow exploration and reopen what has been a contentious matter since an effective exploration ban was imposed in 1972.

Study author Joel Wood, senior research economist at the Fraser Institute, said offshore development would generate billions of dollars in government revenue for the two governments which could be channeled into health care, education and other public services.

C$9.6 billion from single project

The baseline case assumes an oil price of US$90 per barrel and predicts that net benefits would remain positive as long as oil prices were above US$49 a barrel.

“It’s a pretty conservative estimate, because if a world-class regulatory regime was put in place before development proceeded, those costs would be expected to be a lot lower,” Wood said.

The study calculated that 43 percent of potential revenues would go to the private sector, 39 percent to the B.C. government and 18 percent to the Canadian government.

The Fraser Institute estimated the Queen Charlotte, Tofino and Winona basins hold 9.8 billion barrels of oil and 43.4 trillion cubic feet of gas based on a Geological Survey of Canada report and a government-commissioned report analyzing a single offshore project.

Regulations stringent

But he argued that Canada has “more stringent regulations and liability rules” than Norway, the United Kingdom and the U.S. Gulf of Mexico and a strong safety record.

The experience in Newfoundland shows risks can be contained, so there is “no reason why B.C. could not also safely develop its offshore oil resources,” he said.

Wood doubted that a “catastrophic environmental scenario would take place” in B.C., noting the water depths are much shallower than the Gulf of Mexico, where a U.S. presidential commission deemed that the BP Deepwater Horizon spill was the result of human error.

He said evidence from the U.S. suggests that as oil exploration moves into deeper water the chance of well blowouts and fires increases.

Because B.C. has waited so long before embarking on major exploration it has a chance to learn from mistakes and successes elsewhere.

Others say risks too high

“Lifting the moratorium would put at risk more than 40,000 jobs in fisheries, forestry and tourism on the B.C. coast that depend on a health environment,” he said.

“Canada needs to invest in developing our wealth of renewable resources in a sustainable way, not seeking to squeeze out the last drop of oil from the tar sands or from beneath the ocean,” he said.

Karen Wristen, executive director of marine conservation group Living Oceans Society, said it would be an “extremely bad idea to industrialize our coastline. It flies in the face of everything we worked so hard to demonstrate the last time the question was raised.”

“If we were to have a major spill the potential for catastrophic loss of ecosystems would be huge,” she said.

Wristen said the Hecate Strait, between the mainland and Haida Gwaii (formerly the Queen Charlotte Islands), is thought to contain the largest oil deposits, but is dangerous because of frequently stormy weather and high waves.

“This is not a place where you want to put an oil drilling platform … and try to repair your mistakes when they happen,” she said.

Matt Horne, director of the Alberta-based Pembina Institute’s climate change program, said issues such as shale gas and fracking in B.C. and the proposed Enbridge and Kinder Morgan pipelines needed partial resolution before the offshore moratorium should be ended.

“Whether provincially or federally, we don’t have the policies and planning in place to adequately manage offshore resources,” he said.

Rachel Forbes, an attorney at West Coast Environmental Law, said no policies or regulations could properly manage risks.

“From our perspective, it’s a risk that can’t really be mitigated, especially on certain parts of the coast,” she said.