WESTERN CANADA: British Columbia moves to open offshore

Canada's West Coast, where for 30 years federal and provincial moratoria have prohibited offshore exploration, is about to experience a reawakening. .

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BC government forms offshore oil and gas team

Richard Neufeld
Minister of Energy and Mines, Province of British Columbia

Canada's West Coast, where for 30 years federal and provincial moratoria have prohibited offshore exploration, is about to experience a reawakening. The province is implementing vital initia-tives that could bring offshore development in the next seven years.

A mention of Canada's offshore oil industry immediately brings to mind Newfoundland and Nova Scotia or perhaps the Beaufort Sea. Rarely do people think of British Columbia, but Canada has three coasts on three different oceans. The west coast of British Columbia (or "the wet coast" as it is known to many of its inhabitants because of its significant rainfall) extends from the capital city of Victoria, just north of Seattle, to the bottom of the Alaskan Panhandle.

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According to geological estimates, beneath this biologically rich and culturally diverse coastline lie significant hydrocarbon resources. Development of these resources could be a potential boon for the province. So what has kept these resources locked up? The answer to that question is that a 30-year-old government ban on all offshore exploration and development has been in place. Now serious questions have been raised about the ban's scientific basis.

While the federal and provincial governments' moratoria remain in place, many events have occurred to move the province toward developing its offshore oil and gas resources (Offshore, December 2001).

Resources placement

The issues become clearer with a firm understanding of the geographical, cultural, and political context.

Not only is the coast of British Columbia physically and biologically diverse, it is also home to coastal communities ranging from small isolated settlements to larger communities with port or rail facilities.

The waters in the region range from very shallow depths in Hecate Strait to deepwater off Vancouver Island. And the weather is volatile. Waves in excess of 20 m and 100-mph winds have been recorded during winter storms. The area also is seismically active and is comparable to the presently producing Cook Inlet, Alaska, and the coast of California for earthquake occurrences. On the positive side, the temperature is mild, snow is rare for most of the coast, and ice is not a concern.

While much attention has been placed on the Queen Charlotte basin, there are three other hydrocarbon basins off British Columbia. The QC basin, in Hecate Strait, is believed to have the greatest geological potential, with 9.8 Bbbl of oil and 25.9 tcf of gas. In fact, there are numerous documented oil seeps on the Queen Charlotte Islands, or Haida Gwaii.

These economic and estimated geological conditions would seem to make British Columbia a perfect candidate for offshore development.

Current activity

Throughout the 1950s and 1960s, the federal government issued exploratory licenses up and down the West Coast. Eighteen dry exploratory wells were drilled. During this period, the province also issued licenses, primarily in the Strait of Georgia. While ownership had not yet been determined, it was clear that both the province and the federal government had jurisdiction over different aspects of resource management. The lack of a shared management regime, plus additional concerns regarding tanker safety, led the federal government to declare a moratorium in 1972 on exploration and development.

Interest arose again in the 1980s, leading to talks between the two governments on a Pacific Accord, not unlike the Atlantic Accords, which set out federal-provincial arrangements in Newfoundland and Nova Scotia. The governments initiated a joint environmental assessment that reported in 1986. The talks ended in 1989 when, as a reaction to the Exxon Valdez spill and another smaller spill off Washington State, the province established a moratorium. Since that time, the issue has been at a virtual standstill.

Shortly after the election on May 16, 2001, the new provincial government decided to determine whether offshore development could be undertaken in a scientifically and environmentally sound manner. At the same time, the government announced it would appoint the Independent Scientific Panel to address scientific and environmental questions and would be appointing the Offshore Oil and Gas Task Force to collect community input concerning offshore development.

Gathering data

The province retained Jacques Whitford Environment Ltd. to update a 1998 report that was never publicly released. The new "Update on Offshore Development Technologies," published in October 2001, concluded that there are no "fatal flaws" prohibiting the development of offshore oil and gas resources in British Columbia.

Immediately following the completion of the Jacques Whitford report, the panel and task force began their work. On Jan. 15, 2002, the panel concluded that despite the existence of information gaps, there is no scientific basis to justify a blanket moratorium for the entire coast of British Columbia.

The panel also made 15 specific recommendations where the province should address information gaps. Meanwhile, the task force, consisting of six elected members of the legislative assembly, toured 10 coastal communities soliciting input from citizens. While opinions on offshore development varied, there was an overwhelming desire to acquire more information.

In response to the panel report and the task force report, the province granted $1.3 million to the University of Northern British Columbia to advance the state of knowledge on offshore science and other issues for British Columbia.

Government commitment

Under Premier Gordon Campbell's leadership, the province issued "Energy for our Future: A Plan for BC" in Nov-ember 2002. The plan commits the government to ensuring a secure and reliable supply of energy for all British Columbians. Policy Action No. 11 of the energy plan states, "A stand-alone offshore oil and gas team will be established to move effectively towards development of British Columbia's offshore oil and gas resources in a scientifically sound and environmentally responsible manner. The team will work with the federal government, First Nations, coastal communities, educational institutions, including the University of Northern British Columbia, industry, and other interests to achieve this objective." In plain terms, the team's job is to move offshore development forward.

During the Feb. 11 speech from the throne, Lieutenant Governor Iona Campagnolo said, "Offshore oil and gas exploration holds tremendous promise for communities in the Northwest and on Vancouver Island. By 2010, your government wants to have an offshore oil and gas industry that is up and running, environmentally sound, and booming with job creation."

Disproving the opposition

Skeptics on offshore oil and gas development in British Columbia sometimes point to the east coast of Canada and say that it will be 20 or 30 years until development occurs in British Columbia, if at all. Some also argue that people from outside the province, if not outside Canada, will fill most offshore jobs. These claims ignore two distinct advantages that British Columbia has for offshore development.

First, northeastern British Columbia has a long history of onshore development. Three percent of North America's natural gas production comes from British Columbia, earning the province $1.1 billion in revenue in 2002. The province has 50 years' experience in onshore regulation, and its Oil and Gas Commission has established a reputation for efficient, effective, and prudent oversight of development and production.

Second, the province has a highly skilled workforce and well-developed technological sector. Ironically, many British Columbia firms are already active in the offshore – but in places such as the Sakhalin Islands. The province also boasts an advanced education system that includes some of Canada's top institutions.

The Province of British Columbia is actively working to raise its profile on the offshore oil and gas stage. The province has recently joined the Interstate Oil and Gas Compact Commission and will attend and exhibit at the Offshore Technology Conference in Houston, Texas, in May 2003.

The next phase

So what are the next steps? Despite the province's good intentions, British Columbia has limited ability to act alone. While ownership (federal versus provincial) is clear in some areas and disputed in others, both governments have jurisdiction over certain activities. In order for offshore activity to advance in British Columbia, agreements regarding a management regime, which will include fiscal, regulatory, and environmental assessment, will need to be established. Furthermore, there are a number of scientific questions that require investigation, and a mechanism to engage coastal communities and First Nations must be in place.

The province has made a definitive move in establishing the British Columbia Offshore Oil and Gas Team. The team will focus its efforts on meeting the 2010 goal for achieving offshore development in British Columbia. Key areas of activities over the next two fiscal years include information acquisition and coordination, working with First Nations and communities, regulatory and legal analysis, federal and provincial negotiations, and industry relations.

Author
Richard Neufeld was appointed British Columbia's Minister of Energy and Mines in 2001. He previously served as energy, mines, and northern development critic for the official opposition. For information on BC's offshore, visit the website at www.em.gov.bc.ca/Oil&gas/offshore.

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