Offshore oil and gas: Is industry over-regulated or ocean underprotected?
By MARK BUTLER*
HALIFAX -- IN 2004, there were several large spills from offshore platforms, all of which are still under investigation. You may be surprised to learn that government has never charged any of the oil companies operating off the coast of Atlantic Canada for any of the spills, large or small, they have caused. In fact, as far as the Ecology Action Centre can determine, no oil company operating off this coast has been charged for any environmental infraction in the last 15 years.
Obviously, there have been instances during this period when companies have been negligent and the government should have laid charges. It appears government has decided to go easy on the offshore oil and gas industry.
The industry and, more worryingly, a number of politicians say the exact opposite. They complain that cumbersome environmental rules are driving the companies from our region.
The industry states that it takes too long to get environmental approval for projects compared with other countries. Interestingly, they aren't complaining about other areas of environmental regulation, such as enforcement or exploration licences.
Let's look at these three areas in more detail: 1) enforcement around spills; 2) licensing; and 3) project approvals.
A single offshore project reports approximately 15 spills per year. Most of them are "small - in the range of 10 litres to 500 litres - but there are nearly always a couple of spills over 500 litres each year.
The Canada-Nova Scotia Offshore Petroleum Board's (CNSOPB) compliance policy states that they prefer not to suspend operations or lay charges, but rather to rely on a "co-operative, consultative process." I am sure all of us would prefer such gentle treatment from our regulators. Imagine a world where enforcement officers never write a parking or speeding ticket.
This is not a call for punishment for punishment's sake. Studies show that prosecutions are an important part of achieving compliance and preventing further violations.
In 2004, there were three large spills off the coast of Nova Scotia and Newfoundland which generated a lot of public concern because of the impact of the oil on marine life, particularly seabirds. Environment Canada and the Petroleum Board will likely announce the results of their investigations in the next month. Will the public scrutiny around these spills force the government to lay charges?
Opening areas for exploration
The most effective way to minimize the impact of the oil and gas industry on marine life and other industries, such as tourism or fishing, is to keep it away from sensitive areas and species. Thus, the process for determining whether an area should be opened up to oil and gas activity is crucial.
In July 2003, Petroleum Research Atlantic Canada (PRAC) released a little publicized study comparing the issuance of exploration licences in Atlantic Canada to the rights issuance process in the U.K., Norway, U.S., Australia and Alberta. Though the study does not rank the jurisdictions, the information provided suggests that other than Alberta, Atlantic Canada has the most industry-friendly, fast-track licensing procedures of any of these jurisdictions.
In Norway, for example, all areas are closed until opened by Parliament, and they are not opened until a thorough and transparent consultation has taken place involving a review of the environmental and socio-economic impacts. Norwegians contacted by the authors of the PRAC study noted that this approach has helped to reduce future conflicts.
The ongoing conflict over the licences off Cape Breton is the result of a flawed licensing process. The government should adopt the Norwegian model.
The Atlantic Energy Roundtable, a government and industry body, recently released a study which showed that the approval time for projects in Atlantic Canada was several months longer than in other countries, thus increasing costs for industry. However, as a government regulator from the Gulf of Mexico commented in subsequent media coverage, the longer process is understandable given that the industry is in its early stages.
What needs to happen?
The industry blames red tape for the downturn in exploration off Nova Scotia. This is, to put it bluntly, garbage, for two reasons. First, as explained above, overall, environmental regulations in Atlantic Canada are comparable or softer than in other jurisdictions. Second, a series of dry wells, not government red tape, is the overwhelming reason for the downturn in drilling activity.
It is predictable that the industry would present a picture that advances their interests, but it is disturbing when politicians do so even more vociferously. David Anderson, now out of the federal cabinet, has commented that too often, his cabinet colleagues sounded like industry lobbyists rather than elected officials.
Atlantic Canadian politicians need to see beyond royalties and the interests of this powerful industry; otherwise, there will be more spills, more dead seabirds, more tainted fish, and we will all be poorer for that.
*Mark Butler is marine co-ordinator, Ecology Action Centre, Halifax, and a contributor to shunpiking magazine.
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