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Canada Drilling in the Gulf, "Business as Usual"


OTTAWA — In late August, a drillship contracted by Chevron Canada Ltd. finished exploring for oil more than 2 1/2 kilometres below the ocean surface off the coast of Newfoundland — the deepest offshore well in Canadian history.

Yet under Canadian offshore-drilling rules, it will be two years before Chevron must disclose details about the design of the well and what kind of equipment it had in place to prevent a blowout — not to mention how that equipment actually held up in the uncharted depths of the Orphan Basin, more than 400 kilometres northeast of St. John’s.

Critics say it’s an example of the coziness between the companies venturing ever deeper off Canada’s coasts in their quest for untapped oil and gas, and the regulators responsible for holding them to account.

“This is so reminiscent of the U.S. situation in the gulf. People claimed (to be protecting) public-private secrets, but really, the public was left in the dark,” said New Democrat MP Nathan Cullen.

“If you’re proud of your safety procedures, then clearly you’d want to tell the public about it.”

This Wednesday marks six months since a blowout at BP’s Macondo well in the Gulf of Mexico set off an explosion on the Deepwater Horizon rig that killed 11 workers and unleashed the biggest offshore oil spill in history.

But even as the United States imposes strict new drilling standards, critics say the attitude of oil companies and regulators in Canada remains essentially the same: Trust us.

“It’s business as usual,” said William Amos, director of the University of Ottawa-Ecojustice Environmental Law Clinic, a non-profit environmental law organization.

"In the U.S, there’s a new era that has dawned in offshore oil development and, in Canada, we’re still asleep.”

Last week, U.S. President Barack Obama lifted the moratorium on deepsea drilling in the gulf, seven weeks ahead of schedule. At the same time, the Obama administration unveiled sweeping reforms that will tighten rules on everything from environmental assessments to drilling permits, safeguards against blowouts and spill-response procedures.

Under the new rules, companies will have to install specific types of equipment to prevent blowouts, such as a “deadman” system that automatically shears the drill pipe and seals the well when the signal to the rig is lost. In Canada, the government quietly enacted regulations last December that loosened the requirements for operators to install specific safeguards.

Analysts predict the additional red tape and costs of the U.S. reforms will significantly slow production in the gulf. Wood Mackenzie, a British research firm, projects gulf deepwater production will slip 17 per cent in the next five years, compared with the level expected before the BP spill. In the longer term, analysts expect offshore oil to remain highly attractive to oil companies, for the simple reason that 40 per cent of discoveries in the past decade have been deepwater projects.

In Canada, very little has changed yet on the regulatory front, and new projects continue to be approved.

In August, Chevron acquired a licence to explore for oil in the Beaufort Sea, off the coast of the Northwest Territories and Yukon, after winning the bidding process with a $103-million bid.

More recently, a junior explorer based in Halifax, Corridor Resources Inc., won approval to conduct seismic surveys in the Newfoundland portion of the Gulf of St. Lawrence, a move that has heightened tensions with the Quebec government, which has banned development in its share of the gulf.

There are only a handful of active offshore projects in Canada, all of them off the East Coast, where drilling is regulated by federal-provincial watchdogs. A long-standing moratorium bans drilling off the B.C. coast, and the National Energy Board, which oversees drilling off Canada’s Arctic coast, isn’t expected to approve any drilling in the Beaufort for at least a couple of years.

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