05 May 2010

Big Oil has L’il Buddy available for offshore fight #cdnpoli #oilspill

If the oil companies operating offshore don’t like environment minister Jim Prentice’s plans to toughen up environmental and safety rules offshore, they might well be able to count on a very potent ally:  Newfoundland and Labrador Premier Danny Williams.

As BP told you last May, under section 5.1 of the Hebron fiscal agreement, the Government of Newfoundland and Labrador is obliged to side with the oil companies in fighting any regulatory change if the industry feels the changes “might adversely affect any Development Project” of the Hebron field.

David Pryce, vice-president of operations for the Canadian Association of Petroleum producers is quoted in the Globe cautioning against what the Globe and Mail described as “potentially punitive regulations”:

“Don’t be too quick to respond, and don’t be too restrictive. That’s a concern for the industry,” said David Pryce, vice-president of operations at the Canadian Association of Petroleum Producers in Calgary.

“The fact that there is this concern, and there are a lot of people talking about could it happen here, the [concerns] are do we get a response that’s beyond what’s needed here.”

On Monday, Danny Williams told the provincial legislature that offshore production operations here meant that an accident might be less likely to spill oil onshore compared to the incident in the Gulf of Mexico. During Question Period, Williams said:

From our own perspective, as recently as this morning, we have looked at just exactly what the situations are in the North Atlantic. It is a general understanding that because the offshore sites are significantly offshore and well east of the Province that the situation that could arise in Orphan Basin or Jeanne d’Arc or the Flemish Pass is that there is a lower likelihood that oil would actually come ashore in Newfoundland and Labrador. Now, that is not to say that it would not.

As well, we are dealing with a heavy crude oil out there, so from a fishing perspective, there is less likelihood that it would affect the fishery although it would certainly affect the gear. However, having said that, I am not trying to minimize the circumstances under any situation, we will make sure that we monitor this very closely and that we adopt the best practices in the world.

Only the Hebron oil field will produce heavy crude.  The others all produce oil of roughly the same weight relative to water as the oil currently leaking in the Gulf of Mexico (API 34).

The Government of Newfoundland and Labrador  - through its wholely owned subsidiary NALCOR - is a direct partner in offshore development with ownership stakes in one of the producing fields and with stakes in two projects under development, including the massive Hebron project.

While Prentice has no direct say in regulating the offshore, he appears to be echoing sentiment in the federal government for strong offshore regulation.

Under the 1985 Atlantic Accord, the Newfoundland Offshore Area is regulated through the Canada-Newfoundland and Labrador Offshore Petroleum Board.  The board is a joint venture between the the Government of Canada and the Government of Newfoundland and Labrador.