Rumoured changes to the way the federal government makes decisions about offshore oil and gas projects have fishermen and environmentalists crying foul on Canada’s East Coast.

The changes would give offshore petroleum boards in Nova Scotia and Newfoundland and Labrador a major hand in future environmental assessments, a move that Gretchen Fitzgerald of Sierra Club Canada calls a “betrayal.”

“This is more than what the oil companies would have got under Stephen Harper,” Fitzgerald, director of Sierra Club Canada’s Atlantic region chapter, told DeSmog Canada.

Offshore oil and gas boards were originally designed to promote oil and gas development. But now they may be assigned a major role in assessing the environmental risk that development poses. These conflicting roles — part regulator, part promoter — is a major source of concern.

For Ottawa, the stakes are high. In 2015 the Liberals were elected in part on the promise to “make environmental assessments credible again.”

DeSmog Canada took a deep dive into the murky waters of offshore petroleum boards to help understand the concerns about the proposed changes.

What are offshore petroleum boards?

There are two such entities in Canada — the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) and Canada-Nova Scotia Offshore Petroleum Board (C-NSOPB). Both were created shortly after the Atlantic Accord of 1985, which established joint management and resource sharing of offshore oil and gas resources.

“The boards were created and primarily designed to ensure economic benefits from oil and gas development,” said Angela Carter, assistant professor of political science at the University of Waterloo and expert in Newfoundland’s offshore regulatory structures.

“Environmental responsibilities are a secondary concern. So there’s something very wrong about the Boards taking on lead environmental assessment responsibility.  — that is not their primary function.”

The chair and CEO of Newfoundland and Labrador’s offshore board previously worked at Chevron, while his counterpart on the Nova Scotia board was the former CEO of Sproule, a Calgary-based petroleum consulting firm. Other board members have industry experience with companies including ExxonMobil, Nexen, Encana, the Maritimes Energy Association, Lasmo and offshore fields including Hibernia, Terra Nova, White Rose and the Sable Offshore Energy Project.

There are no marine biologists on either of the boards, Carter pointed out.

Newfoundland and Nova Scotia both have significant economic stakes in the development of offshore resources, with plenty of potential revenue from royalties and taxes on the line.

ICYMI: BP Wants to Drill Underwater Wells Twice the Depth of Deepwater Horizon in Canada

Both provinces are facing fiscal woes, so their governments — which jointly appoint board members with Ottawa — aren’t exactly advocating for environmental laws that would restrain future development prospects. For example, Newfoundland recently excluded emissions created by offshore oil and gas projects from its greenhouse gas legislation.

“The supposed prosperity that this industry was supposed to bring hasn’t panned out in either province,” Fitzgerald said. “But they’re desperate for the royalties.”

What are the potential changes being proposed?

In mid-2017, the federal government released a discussion paper about its broader overhaul of the environmental assessment processes in Canada.

While the discussion paper only made a handful of references to offshore oil and gas projects, it set off serious alarms for fishery and environmental groups.

That’s because it proposed that future environmental assessments of offshore oil and gas projects would be “jointly conducted” between a new federal “impact assessment” agency and the relevant offshore petroleum board. The Canadian Environmental Assessment Agency currently heads up assessments for major offshore projects, so this would be a significant shift.

Fitzgerald said it would effectively be a de facto abdication to the offshore boards, pointing to an ongoing court case over an oil drilling lease in the Gulf of St. Lawrence, which the federal government passed up the opportunity to intervene on despite having the ability to. As she put it, the federal government is often very reluctant to step in.

ICYMI: How Oil Lobbyists Pressured Canada to Allow Drilling in a Marine Park

While the potential change doesn’t go as far as some would like — with industry and politicians calling for the delegation of offshore boards as “responsible authorities” like the National Energy Board and Canadian Nuclear Safety Commission, which have the power to conduct environmental assessments — recent precedent suggests boosters may get close to the same thing.

“In a way, they are delegating to the provinces what is supposed to be a federal responsibility over our endangered species and over our oceans to a board that’s in a conflict of interest position from the get-go,” Fitzgerald said.

Okay, what would be a better way of doing things then?

Well, listening to the expert review panel on environmental assessments appears to be a good start.

The four-person panel advocated strongly for a single agency to perform all environmental assessments: “An authority that does not have concurrent regulatory functions can better be held to account by all interests than can entities that are focused on one industry or area and that operate under their own distinct practices,” the panel wrote.

According to critics, taking this approach would help avoid the conflicting mandates of both promoting and regulating resource development. As the East Coast Environmental Law Association put it in a recent policy paper, this would promote “impartiality, accountability and public trust.”

Carter said Newfoundland and Labrador’s offshore board has a long-standing problem of lack of transparency and accountability, something which must be rectified with any new assessment arrangement.

“A cornerstone of environmental assessments has to be a free flow of information with the public and ample input from independent experts,” she said. “Transparency is fundamental to environmental assessment, but communicating with the C-NLOPB Board has been compared to meeting a wall of silence.”

Industry often criticizes the duplication of environmental assessments between federal and provincial governments. In a recent presentation by the Canadian Association of Petroleum Producers, the lobby group argued that the 2012 reforms resulted in a “fragmented, repetitive licence by licence approach” for offshore activities.

Creating a single, neutral agency responsible for all assessments could feasibly resolve that issue.

What’s next?

We could see draft legislation in the next few weeks.

The Canadian Environmental Assessment Agency recently told Canadian Press it will “ensure that the views of Canadian, as well as facts and evidence, will guide project decisions moving forward.”

However, “evidence-based decision-making” can be difficult to pull off when dealing with a lack of baseline data to assess environmental impacts, which Carter said is the case in the offshore.

ICYMI: Is Canada Fudging the Numbers on its Marine Protection Progress?

“Right now, given the climate crisis, we need to be winding down fossil fuel extraction,” Carter concluded. “We need regulatory regimes that are focused on managing the decline of fossil fuel production, not ones that are focused on streamlining regulatory processes so we can get more oil out faster.

“That’s the opposite direction we ought to go if we’re interested in climate stability.”

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Canada’s Environment Minister, Leona Aglukkaq, gave Shell Canada up to three weeks to cap any subsea blowout that might result from future petroleum exploration off Nova Scotia’s South Shore. Similar legislation in the U.S. requires companies to cap a ruptured well within 24 hours.

The three-week time period is included in Shell Canada’s capping plan, a part of the company’s proposed Shelburne Basin Venture Exploration Drilling Project. Minister Aglukkaq green-lighted the project on June 15 following an assessment by the Canadian Environmental Assessment Agency.

Under the plan, a blowout would spill oil or gas into the ocean for up to 21 days before Shell would be required to have a capping stack or marine well containment system in place.

Capping stacks buy time for engineers to plan a permanent seal or a diversion of hydrocarbons at the site of a blowout. Because they can weigh 50 to 100 tons, transporting and maneuvering stacking caps to the site and onto a blowout can be time consuming and difficult.

Allowing Shell up to three weeks to contain a blowout means that the company does not have to retain the expensive capping equipment on shore in Nova Scotia or aboard a nearby vessel. Rather, Shell states in the assessment that the equipment can be deployed from Norway with backups in Scotland, South Africa, Brazil and Singapore.

Nova Scotia Decision Pending

John Davis, a photographer for National Geographic, is taking some credit for exposing this issue to public scrutiny and for forcing the regulator to defend its position rather than simply rubber-stamping the environmental assessment.

“We’ve called them on it,” said Davis in an interview with DeSmog Canada. Davis is also a concerned citizen with a lifetime of experience on the oceans as a former fisherman, fish plant owner and resident of Nova Scotia’s South Shore.

“The only good thing is we got them to say, ‘We are reviewing this and maybe something will change.’”

Stuart Pinks, CEO of the Canada Nova Scotia Offshore Petroleum Board, the joint regulator of the industry in Nova Scotia waters, told the CBC in an August 6 interview he is still “knee deep” in the review of the Shell application.

In a statement posted to the regulator’s website the board notes it is conducting an “extensive review” of Shell’s proposed exploratory program and has yet to make a final decision based on the federal environmental assessment.

“The CNSOPB will only authorize Shell Canada’s proposed drilling program once it is satisfied that they are taking all reasonable precautions to ensure that the program proceeds safely and in a manner that protects the environment.”

Following the regulator’s interview with the CBC, Davis said, “Now they’re going to have to consider the environmental safety of the South Shore of Nova Scotia and the fishing industry and communities that exist there.”

Pinks claimed that blowouts are a rare occurrence and that a capping stack is just one piece of equipment among a whole set of systems and processes assessed for the prevention and mitigation of incidents like blowouts. “Blowout prevention would be the main line of defence,” said Pinks who was adamant that his board will require and review a well-capping plan.

In response, Davis pointed out that exploratory wells are particularly dangerous.

“The largest oil well spills are from exploration wells,” he said, citing recent accidents off Australia, the Caspian Sea and in the Gulf of Mexico with the Deepwater Horizon. Davis said the danger of blowouts in exploratory wells comes from the inability of oil companies to predict the backpressure of a well until a drill breaks into a reserve.

In 2010, the BP Deep Water Horizon platform exploded during a blowout that killed 11 workers and dumped 4.9 million barrels of crude oil into the Gulf of Mexico at enormous cost to wildlife, habitat and livelihoods. Crude flowed for 87 days before the well was finally sealed. A report in 2012 found that the well still leaks.

Davis is troubled by this recent history. “If you look at Deep Water Horizon, they were in about 1000 metres. Shell is going to be in about 3000 metres of water. [BP was] 80 or 90 kilometres offshore. Shell is going to be 250 kilometres offshore.”

“They are in deeper water, in environments that are much harsher, at the very edge of their technological capability.”

Contrasting U.S. Regulations

In comparison to the leeway granted Shell by the Canadian government, U.S. regulations require marine blowouts to be capped within 24 hours. To achieve this goal, companies need to keep stacking caps close to offshore wells.

For a marine drilling project off Alaska, Shell keeps a stacking cap aboard a nearby vessel as required by the American equivalent of the Canadian Department of the Environment.

Pinks said the Alaska comparison is not a fair one because ice can move in very quickly, making the presence of a capping stack nearby essential.

But Davis does buy Pinks’ claim: “He’s blowing smoke. Ice floats at the surface and the capping stack is at the sea floor. Shell knows when the ice is coming. The drilling stops well before any ice arrives at their site. That was a red herring. That was Mr. Pinks pretending that Alaska has a problem we don’t have here.” 

Pinks would not say whether or not the Shell Canada plan for the Shelburne Basin would require the presence of a stacking cap as in other jurisdictions around the world.

“We don’t look at each component in isolation,” he said.

Whatever equipment is brought into play, Davis is asking for one assurance. “Surely we can clean up oil in the offshore. That’s the simple request everyone on the South Shore should be making to our Minister of the Environment and to our Alberta-based, petrochemical government.”

Image: Shell

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