Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Chevron plans to use the Stena Carron drillship to drill the 2010 Orphan Basin exploration well. (Stena Drilling)
Chevron plans to use the Stena Carron drillship to drill the 2010 Orphan Basin exploration well. (Stena Drilling)

Cover story

Perils and profit of offshore oil Add to ...

When the Ocean Ranger drilling platform sank in a raging Valentine's Day storm off the coast of Newfoundland in 1982, it claimed 84 lives and scarred a generation of Newfoundlanders, including a young sea captain named Mark Turner who helped in the futile search for survivors.

After witnessing the tragic cost that can accompany offshore oil, Mr. Turner went on, like many of his fellow Newfoundlanders, to experience the other side of the province's drilling bonanza, becoming chief executive officer in a project to build a massive natural liquefied gas processing plant.

Now, 28 years after the Ocean Ranger disaster, he is wrestling once again with the perils and the profits that go along with Newfoundland's offshore bounty. Mr. Turner has been charged with the high-profile and high-stakes job of reviewing how Newfoundland's offshore drilling industry is regulated, and whether it is doing enough to prevent the kind of catastrophe that has befallen the Gulf of Mexico with the blowout of the BP PLC well.

Mr. Turner is confronting a question that will have a profound impact on the fortunes of Newfoundland and Labrador, and that has come into sharper focus for regulators around the world in the wake of the BP blowout: How much risk is acceptable in pursuit of oil-driven prosperity?

His findings will not only shape policy in the Atlantic but will influence federal rules in the Arctic, where international oil companies hope to begin drilling in five years.

Oil spill poison for drillers’ shares, but weak economy worse David Berman's view

Mr. Turner's task involves weighing the dual priorities of the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB). The federal-provincial board is mandated to monitor the safety and environmental impact of the offshore industry; it is also supposed to extract maximum economic benefits from the industry in the form of jobs and opportunities for local businesses.

The board's response to the Gulf blowout has renewed long-standing questions about its ability to balance those competing priorities. Those questions have taken on a new urgency since Newfoundland's government announced in 2006 that it was taking a stake in all new offshore ventures, a decision that gives it a vested interest in ensuring that nothing disrupts the smooth progress of offshore drilling.

After BP's horrendous accident , which killed 11 workers and has caused massive environmental damage, the U.S. government slapped a six-month moratorium on deepwater drilling. But the Newfoundland board declined to do the same, instead allowing Chevron Corp. to begin drilling just 20 days after the Gulf of Mexico blowout, at a depth far greater than BP's well. The decision made the Chevron project the only place in North America where ultra-deep drilling is taking place.

The decision raised doubts about whether the board is willing to insist that the industry adopts aggressive safety measures that would drive up industry costs and perhaps drive away investment. Critics charge that the board's economic mission is overshadowing its other responsibilities and is creating a conflict of interest. "They're there for the jobs and I think that was the one of the big reasons they allowed that [Chevron]well to go ahead," said Ian Doig, a veteran industry analyst. "If they had stopped that well until they had the ducks in better order, it would have left a lot of jobs out in left field."

On a number of other occasions, the board moved only slowly to respond to safety or environmental concerns. Following a 2009 crash of a helicopter that killed 15 offshore workers and two crewmen, a judge had to tell the board to revise its safety procedures governing such flights - a demand that came a full year after the fatal accident. More recently, biologists accused the board of not responding quickly to spills of oil field chemicals, and not properly assessing risks to marine life.

Newfoundland Premier Danny Williams
East Coast offshore oil regulation fraught with federal-provincial bickering

Now, the federal and provincial governments are being urged to break up the body to ensure that economic considerations don't compromise safety and environmental protection.

Norway and Britain have already separated regulatory and licensing functions for offshore oil. The U.S. has announced it will sever its much-criticized regulator into three separate bodies, including one which will have responsibility only for safety and environmental oversight.

Report Typo/Error
Single page

Follow us on Twitter: @smccarthy55, @PwaldieGLOBE

Next story




Most popular videos »

More from The Globe and Mail

Most popular