04 May 2010

Hebron deal may affect future offshore spill response #oilspill

Premier Danny Williams assured the people of the province on Monday that his administration will ensure that “the necessary policies, procedures and processes are put in place…” to deal with an offshore oil spill like the one in the Gulf Of Mexico.

During Question Period in the provincial legislature, Williams also said that “the people of the Province can be assured that we will adopt the best practices in the world. As we come to this process now in the Gulf of Mexico, if there are any new devices or methodologies or technologies that are developed, we will make sure that they are adopted in our offshore.”

Williams said that offshore petroleum board “is responsible primarily for any offshore problems. If it comes to any leakages or seepages that come from tankers or ship transports, then that is the responsibility, of course, of Transport Canada.”

Williams also told the legislature that “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.”

But as Bond Papers noted exactly one year ago, under section 5.1 of the Hebron financial agreement, “The Province shall, on the request of the Proponents…support the efforts of the Proponents in responding to any future legislative and regulatory changes that may be proposed by Canada or a municipal government in the Province that might adversely affect any Development Project, provided such action does not negatively impact the Province or require the Province to take any legislative or regulatory action respecting municipalities.”

In other words, should the federal government – Transport Canada, for example – try to beef up offshore regulations, the provincial government would be obliged to oppose such changes if the oil companies felt they would “adversely affect” the Hebron development and asked the provincial government for support.

That intervention might be much easier in a situation involving heavy oil if, as the Premier asserted, “there is less likelihood that it would affect the fishery although it would certainly affect the gear.”

Of the fields in production or under development, only the Hebron field contains heavy oil.  The producing fields – Hebron, Terra Nova and White Rose – all pump light, sweet crude of about the same weight compared to water (API) as the oil currently spilling into the ocean in the Gulf of Mexico (API 34).

While prevailing winds and currents may not bring the oil from any of those fields to shore in Newfoundland and Labrador, there’s no public indication of how far across the Atlantic a spill might go and what impact it might have in Europe. 

Williams also did not discuss an contingencies to deal with an oil disaster on the south coast of the island, the coast of Labrador or in a Gulf of St. Lawrence development such as one potentially at Old Harry.

Williams did say that, as far as the provincial government’s offshore equity stakes go,  “the Government of Newfoundland and Labrador stands behind the environmental liabilities no different than the Abitibi situation. When environmental disasters happen, we go to our primary source of responsibility and then the government, of course, is the backup at the end of the day.”