Bloomberg Canada’s Cullen Wants ‘Pause’ in Offshore Drilling

Greg Quinn
Thursday, May 13, 2010

May 13 (Bloomberg) -- Canada should consider enforcing a “pause” on drilling by companies such as Chevron Corp. after an oil spill in the Gulf of Mexico underscored the risks of deep-sea rigs, said opposition lawmaker Nathan Cullen.

“I want companies sitting in front of me, and looking us all in the eye and saying this is what happened,” said Cullen, 37, who led a push for lawmakers on the House of Commons natural resources committee to hear today from a BP Plc executive and federal regulators.

Canadian and U.S. lawmakers are reviewing safety measures after a Transocean Ltd. rig exploded April 20 at a BP site, causing 5,000 barrels of oil a day to leak in the Gulf of Mexico.

BP, which leased the rig from Transocean, has spent $450 million so far on its effort to stop the spill and clean it up, it said today. Canada has the largest oil reserves outside the Middle East, led by Alberta’s oil sands deposits, and has projects in the Atlantic Ocean off the coast of Newfoundland.

“It’s reverse-onus time. I don’t have to prove this thing is risky, they have to prove it’s safe,” Cullen, the New Democratic Party’s energy and natural resources critic, said in an interview in Bloomberg’s Ottawa office yesterday. “The ability to drill is a privilege, not a right.”

Emergency Response

“BP continues to do everything it can in conjunction with governmental authorities and other industry experts to find a solution to stop the flow of oil on the seabed or contain it before it reaches surface,” Anne Drinkwater, president of BP Canada Inc., told lawmakers today.

Gaetan Caron, the head of the National Energy Board, said “no safety regulator can possibly say an accident will never happen,” when asked about the risks of drilling in the Arctic. Inuit leaders also testified about their worries over proposed drilling in Canada’s far north.

The government in Canada’s easternmost province of Newfoundland yesterday appointed an expert to review how to prevent and respond to offshore spills. Chevron says it’s exploring this year in the Orphan Basin about 430 kilometers (267 miles) northeast of Newfoundland’s capital St. John’s. The water in the basin is 2600 meters (8350 feet) deep, a record for Canadian drilling.

“It would be inappropriate to speculate on any regulatory changes in Canada arising from the Gulf of Mexico incident,” Chevron spokesman Kurt Glaubitz wrote in an e-mail message. “Chevron recognizes the significance of the Gulf of Mexico incident and along with the rest of the industry, we want to understand what caused the incident so we can apply any lessons to further enhance our safety.”

Moratorium

Opposition leader Michael Ignatieff of the Liberal Party told the Canadian Broadcasting Corp. May 11 that “questions about a moratorium might come into play” if safety issues aren’t addressed. Canadian Environment Minister Jim Prentice has said an exploration moratorium isn’t needed.

“Moratoriums seem to have particular significance in the oil and gas community, that send shockwaves around investment,” Cullen said. “There’s a way to suggest pausing” where existing leases are re-examined, he said.

The National Energy Board said this week it will review safety measures for Arctic drilling after the U.S. spill. While there are no projects or applications to drill in the region now, Canada has discussed exploring new energy deposits in the country’s Arctic. Other countries, including the U.S. and Russia, are working to settle disputed claims to the region.

‘Wedded to Oil’

“The larger question here is that we are moving from known, relatively safe conventional oil to a territory where things are unknown, riskier, much more expensive,” Cullen said.

The pressure for companies such as BP, Chevron and Exxon Mobil Corp. to drill off the U.S. and Canada has increased since Venezuela and Russia curbed access to their deposits, said Larry Hughes, a professor who studies energy policy at Dalhousie University in Halifax, Nova Scotia. Alternate energy sources probably aren’t enough to support major curbs on offshore work as China seeks to build up its own supplies, he said.

“We are worried about the offshore and the environment but the other side is we are wedded to oil,” Hughes said. “Governments will realize that.”

“If the Americans who talk about energy independence, if they even want to make inroads in terms of their energy independence, they will have to push for more offshore activities,” Hughes said.

--Editors: Andrew Barden, Paul Badertscher

To contact the reporter on this story: Greg Quinn in Ottawa at gquinn1@bloomberg.net.

To contact the editors responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net; David Scanlan at dscanlan@bloomberg.net.

 
 

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