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The Hibernia oil platform, off the coast of Newfoundland.

PETRO-CANADA

The federal government has released new regulations that reduce environmental oversight for offshore drilling as the oil industry is planning new exploration in the Beaufort Sea and the Gulf of St. Lawrence.

The Harper government overhauled the country's environmental assessment legislation in its omnibus budget bill last year. As a result, it had to produce a list of project types that would require environmental assessment, which provides not only approvals but recommends ways to reduce risks.

It released a list on Wednesday that also contains a change in the regulation of activity in Canada's offshore, which is handled by federal-provincial offshore petroleum boards on the East Coast and the National Energy Board in the Arctic. Projects will be required to undergo an environmental assessment for only the first exploratory well "in an area set out in one or more exploration licences."

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Previously, every exploratory offshore well needed an assessment. In 2012, the government eliminated any requirement for environmental assessments for offshore drilling, but established the less-stringent rule on Wednesday.

"This grants enormous discretion to the regulator," said William Amos, director of the EcoJustice Environmental Law Clinic at the University of Ottawa. The federal-provincial boards or the National Energy Board will determine what is meant by "an area set out in one or more exploration licences," and therefore, when a review is needed, he said.

"This opens the door for industry to play politics and exert pressure on the regulator, likely in confidential ways," Mr. Amos said.

Officials at the Canadian Environmental Assessment Agency said the new regulations would cover a "drilling program" – a series of wells in a given area – by a company or consortium that could include several licences.

The Canada-Newfoundland and Labrador Offshore Petroleum Board is assessing Corridor Resources Inc.'s plan to drill an exploratory well in the Gulf of St. Lawrence at the Old Harry field, which the company believes contains significant amounts of oil or natural gas. If approved, Corridor plans to drill its first well next year.

Several community and environmental groups and First Nations have expressed concern and outright opposition to oil and gas development in the Gulf. If Corridor's application is approved, future wells in the area covered would not need an environmental assessment, although the company would need to meet technical requirements for individual wells.

In the Arctic, Imperial Oil Ltd. and its partners, ExxonMobil Corp. and BP PLC, have submitted an application to begin drilling in the deep water of the Beaufort Sea, hundreds of kilometres from shore.

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Mr. Amos said the new regulations raise new concerns about Ottawa's approach to oil exploration in the North, where conditions are extreme and drilling in deep water has not been done. The companies have pooled two exploration licences in waters 60 metres to 1,500 metres deep and comprising 100 square kilometres.

The National Energy Board would decide whether an environmental assessment for the first well would cover subsequent drilling in the two licences, or in a broader area that is covered by other licences, the environmental lawyer said.

So far, the board has been cautious in its approach to drilling in the Beaufort, requiring companies to have the capacity to drill a relief well in the event of blow out in the same season the initial well was begun. It has said it would consider alternative safety measures, but only they are as effective as the relief well.

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