Newfoundland’s offshore oil gamble

The ocean swells were reaching more than eight metres high when the SeaRose decided to resume pumping oil in the middle of one of Newfoundland’s worst storms in decades.

That decision in November by the SeaRose, a floating production and storage vessel operated by Husky Energy, led to the largest spill in the region’s history. More than 250,000 litres of crude dumped into the ocean when a subsea flow line disconnected in the heavy seas.

For two Canadian researchers, the incident is just the latest evidence that the offshore oil and gas industry needs the oversight of an independent environmental agency to better protect Newfoundland’s Grand Banks region.

York University’s Gail Fraser and the University of Waterloo’s Angela Carter say it’s critical the offshore energy industry have stricter regulation, at a time when Newfoundland is trying to dramatically expand oil production in the ecologically sensitive region.

“Our concern, in light of that spill, is that the system is obviously not working,” said Carter, a Newfoundland-raised political scientist who focuses on the environmental politics of oil and climate change. “How is it possible that this was a procedure that was deemed acceptable? There’s something really wrong here.”

Fraser and Carter are asking the federal and provincial governments to establish a new, independent environmental authority they say would avoid the economic conflicts of the current regulator, the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB).

Newfoundland’s Grand Banks is a diverse ecosystem that’s part of a significant marine environment for seabird colonies, marine mammals and a $1.4 billion fishery. It’s a habitat for millions of migratory birds, endangered leatherback turtles, harbour porpoises, seals and multiple species of whales.

Puffins fly in front of an iceberg off the coast of Newfoundland. An oil spill in 2004 is believed to have killed 10,000 seabirds. Photo: Gail Fraser

10,000 seabirds killed in 2004 spill

But more than 350 kilometres off the eastern coast of Newfoundland, it’s also out of sight for most Canadians. A 165,000-litre oil spill in 2004 in the same area is believed to have killed 10,000 seabirds, but because it happened so far from land in heavy seas that dispersed the damage, few people saw any signs of it.

“It’s out of sight. There’s no graphic images of seabirds being killed to grab the public, and promote outrage that this is going on. It’s a hard one to get the public engaged in,” said Fraser, a biologist whose research focuses on the environmental management of offshore oil and gas industry, and avian wildlife.

That 2004 Terra Nova spill, the worst in Atlantic Canada’s history until the SeaRose incident, resulted in $290,000 in fines for operator Petro Canada. Compare that to the $3 million penalty for Syncrude Canada for the deaths of 1,600 ducks at one of its Alberta tailings ponds in 2008.

The oil sector’s track record for protecting this often-unseen environment, and self-reporting the damage it’s doing, is poor, Carter and Fraser argue. And it’s not just spills that cause challenges. Routine waste discharges, marine noise, light pollution that impacts seabirds and flaring are all common problems, they say.

Husky Energy’s decision to resume pumping oil in a major storm followed a near-miss with an iceberg in May 2017, when the SeaRose delayed disconnecting and opted to gamble in favour of continuing oil production.

“These incidents show that the existing regulatory structure allows oil companies to act primarily in accordance with their economic interests to restart production as soon as possible, or continue with risky production, rather than to protect the environment,” reads a letter Fraser and Carter sent to federal Environment Minister Catherine McKenna, Natural Resources Minister Amarjeet Sohi and his provincial counterpart Siobhan Coady.

Offshore petroleum board has gaps in oversight

Critics say the offshore petroleum board is more concerned with developing the offshore industry and producing revenue for government coffers than protecting the environment. One obvious problem is that the regulator doesn’t have the power to tell operators when to resume production in severe weather. That leaves the oil companies free to take too many risks, Fraser said.

“They made a revenue decision, rather than thinking, ‘Maybe we shouldn’t be doing this,’ ” she said. “It has identified another gap in overseeing what’s going on.”

Husky Energy, meanwhile, says it has since updated its guidelines for operating in severe weather, put in new protocols to prevent similar spills and is “deeply sorry for the incident and committed to learning from it and putting measures in place to ensure it does not happen again.”

Fraser and Carter want a stronger, more transparent environmental agency that would focus on all stages of offshore activity, from site leasing to decommissioning. That should also include the power to monitor waste treatment, emergency response and evaluate the long-term and cumulative environmental effects of offshore oil and gas extraction, they said.

Newfoundland plans to double oil production by 2030

The calls for more environmental oversight in the Grand Banks come as Newfoundland forges ahead with ambitious expansion plans to add 100 new exploration wells and double production to 650,000 barrels of oil per day by 2030 — all this in a challenging and remote marine environment vulnerable to hurricanes, winter storms, icebergs, fog and rogue waves, obstacles that could delay by weeks the delivery of equipment used to stop major leaks.

But increased scrutiny of the offshore industry isn’t always welcome in an economically challenged province where many see oil as a ticket to prosperity.

“We hope the government will act, but history would tell us they don’t have an appetite for that,” Carter said. “We’ve got a government that is hell-bent on increasing production, and is doing it further out, ever deeper, in more extreme, harsher environments. We’ll have more chances of spills, and no possibility of cleaning them up.”

Both the federal and provincial governments would need to agree to create a new regulatory agency, and neither appears motivated to do so. Environment and Climate Change Canada and Newfoundland’s ministry of natural resources declined to comment for this story.

Natural Resources Canada insists the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) is doing a good job regulating the offshore industry, and ensuring that development is being done in a responsible way. It also points to the Frontier and Offshore Regulatory Renewal Initiative, a federal-provincial partnership that aims to improve standards for safety and environmental protection.

“The Government of Canada has confidence in the C-NLOPB and its ability to ensure safety and environmental protection,” the ministry said in an e-mail. “The board’s mandate is to oversee responsible development in the offshore, and that is exactly what we expect it will continue to do.”

It adds that Bill C-69, legislation that will amend the environmental impact assessment process for resource projects if passed by the senate, would create a new agency that it says would ensure reviews of proposed offshore projects would follow a consistent, neutral process.

The C-NLOPB, meanwhile, defends its record of protecting the environment for over 30 years as a regulator. It says it works closely with Fisheries and Oceans Canada and other agencies from both governments to make sure its decisions are based on the latest science.

“Offshore safety and environmental protection are paramount in all board decisions. The C-NLOPB will not approve any offshore activity until an operator demonstrates that it has met the legislative and regulatory requirements and has reduced risks to as low as reasonably practicable,” Lesley Rideout, spokesperson for the regulator, said in a statement.

‘I wonder how we’ll look back on this in 20 years’

Some in Newfoundland aren’t so sure, and are beginning to sound the alarm about what’s happening in the Grand Banks. Gerry Rogers, leader of the provincial NDP, as well as the island’s fisheries union, have joined the lobbying efforts for an independent offshore regulator.

After the SeaRose spill, Carter and Fraser hope public opinion may slowly be shifting in favour of better protecting the ocean environment off Newfoundland’s shores. But they’re not holding their breath.

“I wonder how we’ll look back on this in 20 years,” Carter said. “We have a government redoubling efforts to increase oil production offshore, at a time when, globally, other countries are banning exploration and extraction of oil… I feel like Newfoundland is completely out of step with the climate crisis.”