Newfoundland and Labrador’s Natural Resources Minister is rejecting calls for the overhaul of the agency that regulates the province’s offshore oil industry, even as the U.S. moves to distance its regulator from the companies it overseas.
Premier Danny Williams has promised a full review of the province’s regulatory regime, but in the meantime is allowing Chevron Corp. to drill an ultradeep exploration well in the Orphan Basin, 400 kilometres offshore.
Minister of Natural Resources Kathy Dunderdale said the review will include the province’s regulatory agency, the Canada-Newfoundland Labrador Offshore Petroleum Board (CNLOPB), but said allegations that the board suffers from a conflict of interest with industry are off the mark.
Opposition parties have urged Mr. Williams to declare a moratorium on drilling until the cause of the BP PLC’s deepwater blowout in the Gulf of Mexico is better understood and the province can be assured similar problems won’t occur off its coast.
In the United States Tuesday, Interior Secretary Ken Salazar announced that the government will break up the Minerals Management Service, which both collects royalties from and regulates companies that are producing and drilling in the Gulf of Mexico.
At hearings in Washington, some senators criticized the federal regulator for allowing the industry to forgo some safety practices that are the norm in Norway and Britain – and in Canada.
That includes the use of a remote acoustic sensing system that is used to trigger a valve that prevents a blowout when there is an accident, a capability that was not present on BP’s Deepwater Horizon well.
Still, scientists and environmentalist argue that the federal-provincial board suffers the same conflicts of interest that have afflicted the U.S. regulator.
“The regulator has all this expertise for developing and promoting oil and gas but also is mandated to protect the environment,” said Gail Fraser, a biologist at Ontario’s York University who is studying Canada’s offshore regulations. “I think there’s more than a conflict of interest.”
Ms. Fraser said the board lacks transparency on industry waste and spills into the ocean, and is too cozy with industry, running land sales as well as regulating offshore drilling.
“The CNLOPB has acted much more as a cheerleader for oil development than as a regulator,” said Ian Toner, a biologist at Memorial University who studies sea birds and the effect of oil pollution on them.
“They are routinely covering up vital information about offshore pollution – there is no other way to put it.”
Ms. Dunderdale denied that there is any conflict of interest at the board. She said the board has only limited responsibility for land sales and other industry promotion, saying it is the government that sets royalty rates and reaches financial agreements with the companies.
“There is a large degree of separation that exists in our board in terms of the regulatory pieces and the economic pieces,” she said.
The Newfoundland and Labrador government has rejected opposition calls for a moratorium on drilling, despite suggestions that U.S. President Barack Obama has imposed a freeze on new drilling in the Gulf of Mexico. But the minister said the U.S. is allowing companies to drill where they had already received permits, only freezing new applications for exploration drilling.
Chevron commenced its drilling on the weekend and it will takes weeks, perhaps months, before it drills into the hydrocarbon zone where the risk of blowout is greatest. By that time, Ms. Dunderdale said, industry and governments should have a better understanding of what went wrong in the Gulf of Mexico.
