Shell Canada Ltd.'s recent winning bid to conduct deepwater oil exploration off Nova Scotia has renewed calls to establish a separate safety agency independent of the federal-provincial offshore regulator.
The petroleum giant has committed to spending $970-million over six years in the hopes of finding oil in four deepwater parcels about 200 kilometres off the province’s southwestern shore.
The return of exploration drilling off the Scotian Shelf for the first time since 2005 would be in depths ranging between 1,400 to 3,750 metres.
While Shell is reputable when it comes to its deepwater drilling expertise, the volatile North Atlantic presents some of the “harshest offshore environments in the world,” said Richard Grant, an engineer and expert on safety issues related to offshore drilling rigs
Mr. Grant, who worked on the Canada-Nova Scotia Offshore Petroleum Board from 1997 to 2002, said there needs to be an increased level of scrutiny that the board lacks the resources to exercise. The development of safety regulations was often a slow process, he said.
“What we need to have is one agency that is looking after offshore safety, that develops the regulations and enforces them,” Mr. Grant said.
He supports the findings of Robert Wells, a retired Newfoundland and Labrador Supreme Court judge who called on Ottawa and the provinces to establish a separate offshore safety agency along the lines of those operating in Australia, Norway and the U.K.
Mr. Wells made the recommendation after leading an inquiry into the March 2009 crash of Cougar Flight 491, which killed 17 people as it was ferrying offshore oil workers. He found serious flaws with the Canada-Newfoundland and Labrador Offshore Petroleum Board, saying it lacked transparency and autonomous safety staff which could contribute to a conflict of interest.
Critics have accused the boards of a conflict of interest because they are tasked with developing offshore resources while also verifying that the operators are complying with their safety and environmental plans.
The board says it has separated its safety and operations duties into two separate departments and has passed along Mr. Wells’ recommendation for a separate agency to Ottawa and the provincial government.
Last fall, Nova Scotia Liberal MP Andrew Younger tabled a private member’s bill calling on the provincial government to enter negotiations with Ottawa aimed at creating one federal safety regulator.
The government has said it is talking with the federal government and counterparts in Newfoundland about the Wells inquiry recommendations.
Larry Hughes, a Dalhousie University engineering professor, said he believes safety has to be dealt with by an arms-length agency, given evidence that emerged following the blowout of a BP well in the Gulf of Mexico in 2010.
The explosion killed 11 workers and caused the largest oil spill in U.S. history.
“We saw what happened ... when the Mineral and Mining Services of the United States unfortunately had an extremely cosy relationship with the oil companies and things got lax,” said Mr. Hughes.
“I’m not saying that’s happening here, but it’s the type of thing we want to make sure doesn’t happen.”
Stuart Pinks, CEO of Nova Scotia’s petroleum board, said his agency has a “very robust regulatory regime” that is constantly being improved.
Drilling and production regulations have been updated in December 2009 that give oil and gas companies guidance on how best to comply, Mr. Pinks said.
There is also oversight of drill rig fitness certification by the board’s nine safety officers who do their own verification reviews, he added.
“As lessons are learned from incidents such as what happened in the Gulf, our guidelines are reviewed and revised where necessary to capture some of the latest practices that will reduce risk.”
The board said 12 deepwater wells have been drilled off Nova Scotia since 1978, with the last being the Crimson well in 2,100 metres of water off the Scotian Shelf in 2005.